JU1U6S0DG9YLT7N8ZV32 2022-01-01 2022-12-31 iso4217:EUR JU1U6S0DG9YLT7N8ZV32 2021-01-01 2021-12-31 iso4217:EUR JU1U6S0DG9YLT7N8ZV32 2022-01-01 2022-12-31 ifrs-full:DiscontinuedOperationsMember JU1U6S0DG9YLT7N8ZV32 2021-01-01 2021-12-31 ifrs-full:DiscontinuedOperationsMember JU1U6S0DG9YLT7N8ZV32 2022-01-01 2022-12-31 ifrs-full:AggregateContinuingAndDiscontinuedOperationsMember JU1U6S0DG9YLT7N8ZV32 2021-01-01 2021-12-31 ifrs-full:AggregateContinuingAndDiscontinuedOperationsMember iso4217:EUR xbrli:shares JU1U6S0DG9YLT7N8ZV32 2022-01-01 2022-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember JU1U6S0DG9YLT7N8ZV32 2022-01-01 2022-12-31 ifrs-full:NoncontrollingInterestsMember JU1U6S0DG9YLT7N8ZV32 2021-01-01 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember JU1U6S0DG9YLT7N8ZV32 2021-01-01 2021-12-31 ifrs-full:NoncontrollingInterestsMember JU1U6S0DG9YLT7N8ZV32 2022-12-31 JU1U6S0DG9YLT7N8ZV32 2021-12-31 JU1U6S0DG9YLT7N8ZV32 2020-12-31 JU1U6S0DG9YLT7N8ZV32 2020-12-31 ifrs-full:IssuedCapitalMember JU1U6S0DG9YLT7N8ZV32 2020-12-31 ifrs-full:SharePremiumMember JU1U6S0DG9YLT7N8ZV32 2020-12-31 ifrs-full:OtherEquityInterestMember JU1U6S0DG9YLT7N8ZV32 2020-12-31 ifrs-full:StatutoryReserveMember JU1U6S0DG9YLT7N8ZV32 2020-12-31 ifrs-full:TreasurySharesMember JU1U6S0DG9YLT7N8ZV32 2020-12-31 ifrs-full:OtherReservesMember JU1U6S0DG9YLT7N8ZV32 2020-12-31 mbcp:NetIncomeForTheYearAttributableToBanksShareholdersMember JU1U6S0DG9YLT7N8ZV32 2020-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember JU1U6S0DG9YLT7N8ZV32 2020-12-31 ifrs-full:NoncontrollingInterestsMember JU1U6S0DG9YLT7N8ZV32 2021-01-01 2021-12-31 mbcp:NetIncomeForTheYearAttributableToBanksShareholdersMember JU1U6S0DG9YLT7N8ZV32 2021-01-01 2021-12-31 ifrs-full:OtherReservesMember JU1U6S0DG9YLT7N8ZV32 2021-01-01 2021-12-31 ifrs-full:IssuedCapitalMember JU1U6S0DG9YLT7N8ZV32 2021-01-01 2021-12-31 ifrs-full:SharePremiumMember JU1U6S0DG9YLT7N8ZV32 2021-01-01 2021-12-31 ifrs-full:OtherEquityInterestMember JU1U6S0DG9YLT7N8ZV32 2021-01-01 2021-12-31 ifrs-full:StatutoryReserveMember JU1U6S0DG9YLT7N8ZV32 2021-01-01 2021-12-31 ifrs-full:TreasurySharesMember JU1U6S0DG9YLT7N8ZV32 2021-01-01 2021-12-31 mbcp:BancoInternacionalMocambiqueAndSeguradoraInternacionalMocambiqueMember ifrs-full:NoncontrollingInterestsMember JU1U6S0DG9YLT7N8ZV32 2021-01-01 2021-12-31 mbcp:BancoInternacionalMocambiqueAndSeguradoraInternacionalMocambiqueMember JU1U6S0DG9YLT7N8ZV32 2021-12-31 ifrs-full:IssuedCapitalMember JU1U6S0DG9YLT7N8ZV32 2021-12-31 ifrs-full:SharePremiumMember JU1U6S0DG9YLT7N8ZV32 2021-12-31 ifrs-full:OtherEquityInterestMember JU1U6S0DG9YLT7N8ZV32 2021-12-31 ifrs-full:StatutoryReserveMember JU1U6S0DG9YLT7N8ZV32 2021-12-31 ifrs-full:TreasurySharesMember JU1U6S0DG9YLT7N8ZV32 2021-12-31 ifrs-full:OtherReservesMember JU1U6S0DG9YLT7N8ZV32 2021-12-31 mbcp:NetIncomeForTheYearAttributableToBanksShareholdersMember JU1U6S0DG9YLT7N8ZV32 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember JU1U6S0DG9YLT7N8ZV32 2021-12-31 ifrs-full:NoncontrollingInterestsMember JU1U6S0DG9YLT7N8ZV32 2022-01-01 2022-12-31 mbcp:NetIncomeForTheYearAttributableToBanksShareholdersMember JU1U6S0DG9YLT7N8ZV32 2022-01-01 2022-12-31 ifrs-full:OtherReservesMember JU1U6S0DG9YLT7N8ZV32 2022-01-01 2022-12-31 ifrs-full:IssuedCapitalMember JU1U6S0DG9YLT7N8ZV32 2022-01-01 2022-12-31 ifrs-full:SharePremiumMember JU1U6S0DG9YLT7N8ZV32 2022-01-01 2022-12-31 ifrs-full:OtherEquityInterestMember JU1U6S0DG9YLT7N8ZV32 2022-01-01 2022-12-31 ifrs-full:StatutoryReserveMember JU1U6S0DG9YLT7N8ZV32 2022-01-01 2022-12-31 ifrs-full:TreasurySharesMember JU1U6S0DG9YLT7N8ZV32 2022-01-01 2022-12-31 mbcp:BancoInternacionalMocambiqueAndSeguradoraInternacionalMocambiqueMember ifrs-full:NoncontrollingInterestsMember JU1U6S0DG9YLT7N8ZV32 2022-01-01 2022-12-31 mbcp:BancoInternacionalMocambiqueAndSeguradoraInternacionalMocambiqueMember JU1U6S0DG9YLT7N8ZV32 2022-12-31 ifrs-full:IssuedCapitalMember JU1U6S0DG9YLT7N8ZV32 2022-12-31 ifrs-full:SharePremiumMember JU1U6S0DG9YLT7N8ZV32 2022-12-31 ifrs-full:OtherEquityInterestMember JU1U6S0DG9YLT7N8ZV32 2022-12-31 ifrs-full:StatutoryReserveMember JU1U6S0DG9YLT7N8ZV32 2022-12-31 ifrs-full:TreasurySharesMember JU1U6S0DG9YLT7N8ZV32 2022-12-31 ifrs-full:OtherReservesMember JU1U6S0DG9YLT7N8ZV32 2022-12-31 mbcp:NetIncomeForTheYearAttributableToBanksShareholdersMember JU1U6S0DG9YLT7N8ZV32 2022-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember JU1U6S0DG9YLT7N8ZV32 2022-12-31 ifrs-full:NoncontrollingInterestsMember

2022
REPORT & ACCOUNTS
Pursuant to article 8 of the Regulation 5/2008 of the CMVM, please find
herein the transcription of the
2022 Annual Report
BANCO COMERCIAL PORTUGUÊS, S.A.
Public limited company
Registered Office: Praça D. João I, 28, 4000-295 Porto - Share Capital Euros 3,000,000,000.00
Registered at Porto Commercial Registry, under the single registration and tax identification
number 501 525 882
The 2022 Annual Report is a translation of the “Relatório e Contas de 2022” document delivered by Banco
Comercial Português, S.A. to the Portuguese Securities and Market Commission (CMVM), in accordance with
Portuguese law.
The sole purpose of the English version is to facilitate consultation of the document by English-speaking
Shareholders, Investors and other Stakeholders, and, in case of any doubt or contradiction between the
documents, the Portuguese version of the “Relatório e Contas de 2022” prevails.
All references in this document to the application of any regulations and rules refer to the respective
version currently in force.

JOINT MESSAGE OF THE CHAIRMAN OF THE BOARD OF DIRECTORS AND OF THE CEO | 5
INFORMATION ON BCP GROUP | 10
MAIN HIGHLIGHTS OF RESULTS IN 20 22 | 10
MAIN HIGHLIGHTS | 11
INFORMATION ON BCP GROUP | 13
GOVERNANCE | 15
MAIN EVENTS IN 20 22 | 18
BCP SHARE | 23
QUALIFIED HOLDINGS | 33
BUSINESS MODEL | 34
REGULATORY, ECONOMIC AND FINANCIAL SYSTEM ENVIRONMENT | 34
BUSINESS MODEL | 39
MILLENNIUM NETWORK | 43
FINANCIAL INFORMATION | 44
RESULTS AND BALANCE SHEET | 45
BUSINESS AREAS | 96
STRATEGY | 115
STRATEGIC PLAN 2021-2024 | 115
RISK AND OUTLOOK | 119
INTERNAL CONTROL SYSTEM | 120
MAIN RISKS AND UNCERTAINTIES | 126
RISK MANAGEMENT | 130
RATINGS ASSIGNED TO BCP | 168
CAPITAL | 170
PENSION FUND | 171
INFORMATION ON TRENDS | 174
NON-FINANCIAL INFORMATION | 175
REGULATORY INFORMATION | 179
CONSOLIDATED FINANCIAL STATEMENTS | 179
ALTERNATIVE PERFORMANCE MEASURES | 181
APPLICATION OF RESULTS | 184
GLOSSARY | 186
ACCOUNTS AND NOTES TO THE CONSOLIDATED ACCOUNTS | 189
ACCOUNTS AND NOTES TO THE INDIVIDUAL ACCOUNTS | 456
DECLARATION OF COMPLIANCE | 677
ANNUAL REPORT OF THE AUDIT COMMITTEE | 679
OPINION OF THE AUDIT COMMITTEE | 690
SUMMARY OF THE SELF-ASSESSEMENT REPORT | 690
EXTERNAL AUDITORS' REPORT | 699
CORPORATE GOVERNANCE REPORT | 730

2022 REPORT & ACCOUNTS |

| 3

| 2022 REPORT & ACCOUNTS

| 4
Joint Message of the Chairman of the
Board of Directors and of the CEO

The Portuguese economy grew by 6.7% in 2022, despite the adverse external environment, benefiting from
dynamic tourism activity and increased private consumption, after the sharp drop seen during the pandemic. The
recovery of global economic activity, which directly and indirectly affects the growth potential of the Portuguese
economy, was significantly affected in 2022 by Russia's invasion of Ukraine.
The pace of economic recovery as a result of the waning impact of the pandemic and related restrictions, affected
by the persistent constraints on the supply of some products and the rapid recovery in demand, fed an abrupt rise
in the prices of raw materials in international markets, which, exacerbated by the effects of the invasion of
Ukraine on the prices of energy, fertilizers and food, among other goods, caused the inflation rate to rise to levels
not seen since before Portugal's entry in the euro area.
In Poland, despite the risks associated with the geographical proximity of Ukraine and the possibility of a
disruption of the energy supply, the economy showed remarkable resilience, growing by 5.2% for the year.
In Mozambique, the economy accelerated in 2022, supported by a dynamic extractive industry. In Angola,
economic activity continued on a recovery path.
In Macau, economic activity was strongly marked by the Covid-zero policy adopted in China throughout 2022.
In 2023, the performance of economic activity appears less favourable, because of the adverse effects of the
persistence of high levels of inflation, the worsening of financing costs, and the rise in public debt yields with the
consequences that this could have on financial institutions exposed to interest rate risk, as well as uncertainty
regarding developments in the geopolitical situation.
Faced with a challenging environment in 2022, Millennium bcp prioritized the pursuit of key objectives, namely
the strengthening of capital ratios through very rigorous and efficient management, and the improvement of
profitability despite the high impact resulting from litigation and legislative measures in Poland that significantly
affect Bank Millennium. Millennium bcp also further reduced its non-performing assets to a level that normalizes
its position and allows the bank to focus on developing activity to prepare for the future in a context in which
digital technology is increasingly relevant to the customer relationship.
Millennium bcp ended 2022 with a consolidated net profit of 207.5 million euros, compared with 138.1 million
euros achieved in 2021, a growth of 50.3%, despite the extraordinary adverse effects that justified the negative
result of the Polish subsidiary, having simultaneously carried out a consistent effort to strengthen capital ratios
throughout the year.
The evolution of the Group's net profit was strongly influenced by the significant growth registered in the activity
in Portugal, although largely attenuated by the evolution of the result of the international activity, in particular at
Bank Millennium in Poland which was strongly affected by the aforementioned extraordinary impacts.

2022 REPORT & ACCOUNTS |

| 5
The uncertainty surrounding the economic environment in Poland is the main constraint on the Bank's profitability
and, in addition to the legal risks associated with mortgage loans in Swiss francs, other risks emerged in 2022 with
the launch in July of a credit holidays program for mortgage loans in zlotys, whose impacts, recognized in advance
by Bank Millennium, led to non-compliance with the respective regulatory capital requirements and also
prevented the continuation of the planned issuance to comply with local MREL requirements.
The Polish subsidiary immediately activated a recovery plan, which has been implemented quickly and rigorously,
and which allowed, still in 2022, the return of the respective capital ratios to levels above the regulatory
requirements, confirming that the high execution capacity of Bank Millennium, combined with the potential and
quality of its franchise, allows this subsidiary to continue expanding its business while absorbing the impact of the
adverse context.
Despite the extraordinary impacts in Poland, which in 2022 also included the recording of additional impairment
relating to the goodwill of the holding in Bank Millennium, Millennium bcp registered very positive evolution for
operational activity in all the markets where it is present, achieving, in consolidated terms, a core operating
result of 1.87 billion euros, a significant increase of 44.4% compared to the 1.29 billion euros achieved in the
previous year.
This performance in operating activity was evident in the growth of 26.1% in core revenue, revealing the quality of
the franchise in the various geographies, driven by an increase of 35.3% in net interest income and of 6.1% in net
commissions, accompanied by rigorous management that contained the growth of recurrent operating costs to a
controlled increase of 3.1% despite the markedly inflationary context.
The contribution of the activity in Portugal to consolidated results amounted to 353.6 million euros, representing
a significant growth compared to the 172.8 million euros achieved the previous year. If analyzed on a comparative
basis, - excluding non-recurring operating costs - the net result in Portugal was 364.9 million euros, up 51.9%
compared to the 240.3 million euros recorded in December 2021.
Considering the impairment of goodwill relating to the stake in Bank Millennium, the contribution of the
international activity to the consolidated net result amounted to a negative 146.1 million euros in 2022, a
significant drop compared to the equally negative 34.7 million euros recorded in 2021.
Despite the Polish operation maintaining a solid operating performance and its contribution to the consolidated
results having improved compared to the previous year, it continued to present a significant negative annual
result, because of the aforementioned extraordinary effects. Bank Millennium's net result was negative by 216.7
million euros in 2022, which compares with an equally negative 284.4 million euros achieved in the previous year,
reflecting an improvement in the performance of the Polish operation, which, in the fourth quarter of 2022
delivered a positive result of 53.2 million euros, after successive quarters with negative results.
Excluding the aforementioned extraordinary effects, the adjusted net result in Poland in 2022 would have been
positive by 478.6 million euros, a rise of 99.3% compared to 240.1 million euros on a comparable basis the previous
year, confirming the robustness of the business model and the bank's growing relevance in the Polish market.
In Mozambique, Millennium bim presented a net profit of 101.9 million euros in 2022, which compares with 95.6
million euros the previous year, representing a positive variation of 6.6% on a comparable basis.
The quality of the loan portfolio continued to be one of the main priorities, continuing the improvement trend of
recent years with a very significant reduction in non-performing assets in 2022, in the amount of 1.18 billion
euros, with emphasis on the decrease of 19.4% and 27.5% in NPE volume in consolidated terms and in Portugal,
respectively. In Portugal, 2022 saw a reduction of NPE in the amount of 517 million euros, plus reductions of 265
million in properties received for recovery and 376 million in restructuring funds.
The growth of the business and the reduction of NPE put Millennium bcp’s NPE credit ratio at 3.4% in Portugal, in
December 2022, which compares with 4.7% at the end of 2021, confirming the skills developed by the bank
throughout the successful and consistent course of improving the quality of the balance sheet and defending the
bank's capital position.

| 2022 REPORT & ACCOUNTS

6 |
The generalized improvement in credit quality indicators was accompanied by an increase in NPE coverage by
credit impairments in 2022, which reached 68.3%, a level that adequately positions Millennium bcp in a
comparative analysis of the sector, maintaining a robust total coverage of 114.8%.
It is important to highlight the significant organic reinforcement of the bank’s capital position carried out in 2022,
reflecting the quality of the business model, discipline in capital management and the return to positive results in
Poland in the fourth quarter. The CET1 ratio increased by 114 basis points in the fourth quarter, reaching 12.5%
and the total capital ratio stood at 16.8%, standing above regulatory requirements and surpassing in 2022 the
objective that had been established in the strategic plan for 2024. On March 24, 2023, the Bank was notified of
the approval by the ECB of the request for the application of article 352 (2) of the CRR, with which, on December
31, 2022, the CET1 and total capital ratios would have been respectively 13% and 17.5%.
The Bank's already-strong liquidity position was also reinforced in 2022, with a positive variation of 8.5% in
balance sheet resources in the period between December 2021 and December 2022. This variation, resulting from
significant growth in the various operations, raised the balance sheet resources portfolio to 77.2 billion euros,
with emphasis on the increase of around 5 billion euros in Portugal, revealing the bank's ability to continue to earn
the preference and trust of customers.
The gross customer loan portfolio remained relatively stable mainly because of the reduction in international
activity, although the increase in Portugal partially offset this effect. In 2022, performing loans in Portugal grew
by 800 million euros, a 2.1% increase in the portfolio compared to December 2021. This variation was mainly
influenced by the dynamics verified in mortgage loans, which recorded an increase of 3.9% in 2022.
Millennium bcp reaffirmed its leading position in the business segment in Portugal, renewing its leadership
position in the PME Líder and Inovadora Cotec programs, while also continuing to lead in factoring, leasing,
confirming and in the market for mutual guarantees and FEI / EGF financing. Millennium bcp was again considered
by Data-E as the Best Corporate Bank, Main Bank, Most Innovative Bank, Best Relationship Bank and as the bank
offering the Most Suitable Products.
The high commercial intensity of Millennium bcp is also reflected in the ability to attract customers, an indicator
of the Bank's vitality and its growth potential, reflected in the 5.5% expansion of the customer base, which in 2022
reached around 6.5 million customers spread across different geographies. The symbiotic relationship between
people and technology, combining a commercial network made up of high-quality professionals and advanced
technological solutions that provide distinctive user experiences, constitutes the central and differentiating
element of Millennium bcp's business model.
The priority given to investment and innovation in mobile platforms has made a decisive contribution on this
front. At the end of 2022, 63% of all active Customers accessed the Bank's mobile applications and in Portugal
there were increases of 37% in transactions and 46% in sales made through these applications last year.
This digital transition path also contributed to a notable improvement in the Bank's efficiency in 2022, capturing
value from the transformation. The cost-to-income ratio at the consolidated level rose from 48% in 2021 to 37% in
2022, surpassing the target set out in the strategic plan.
At the end of 2022, most of the targets set for 2024 in the Excelling strategic plan had been reached, a fact that
becomes even more relevant if we consider that when it was defined, none of the aforementioned exogenous
constraints were envisaged, and which came to change in a very significant way the macroeconomic environment
in which Millennium bcp develops its activity.
Profitability remains, however, a challenge to be overcome and which, despite showing a positive trend, continues
to require very careful and rigorous management. This is considered an essential objective for 2023 and 2024, and
we are counting on the indispensable support and confidence from Customers, Shareholders, Employees and other
Stakeholders to help us succeed.

2022 REPORT & ACCOUNTS |

| 7
The path we have taken and the evolution achieved by Millennium bcp give us the confidence to state that the
bank will successfully pursue the trajectory outlined in the strategic plan presented to the market, despite the
more unpredictable and challenging context.

Miguel Maya | Nuno Amado
Chief Executive Officer | Chairman of the Board of Directors
Vice-Chairman of the Board of Directors |

| 2022 REPORT & ACCOUNTS

8 |

2022 REPORT & ACCOUNTS |

| 9
Main highlights of the Results in 2022

Robust business model Profitability | A Bank prepared for the future •CET1 ratio increase to 12.5% (13.0% on a pro forma* basis), through organic generation and other initiatives, including securitizations and non-performing assets decrease. At the end of 2022, CET1 ratio stood above regulatory requirement of 9.41%** and exceeded the 2024 strategic plan target. •Reinforcement of the liquidity position. On-Balance sheet customer funds up by 8.5% to 77.2 billion euros reflecting a 4.8 billion euros increase (9.6%) in Portugal. •Non-performing assets decrease: reduction from December 2021 of 535 million euros in NPE, 265 million euros in foreclosed assets and 376 million euros in restructuring funds. •Customer base growth of 5.5%, highlighting the increase in mobile Customers, which represent 63% of total Customers. •Net income of 207.5 million euros, which compares with 138.1 million euros in 2021 and ROE stood at 4.0%, in spite of the extraordinary effects related with Bank Millennium. •Increase of 26.1% in core income of the Group and strict management of operating costs (+3.1%, excluding specific items). •The key effects*** of Bank Millennium were: 525.6**** million euros of costs related with the foreign exchange mortgage loan portfolio, cost related with credit holidays of 282.8 million euros, contribution of 59.0 million euros for the Institutional Protection Scheme (IPS)***** and booking of Bank Millennium goodwill impairment of 102.3 million euros. •Mandatory contributions for the banking sector in Portugal of 62.2 million euros. *Subject to the already requested ECB approval for the application of article 352 (2) of the CRR, meanwhile obtained in March 2023; Fully implemented ratio including unaudited net income for 2022. ** Minimum prudential requirements since January 1st, 2023. *** Before taxes and minority interests. **** Includes provisions for legal risk, costs with out-of-court settlements and legal advice. ***** New polish fund aimed to guarantee the stability of the financial system, ensuring the liquidity and solvency of member banks.

| 2022 REPORT & ACCOUNTS

10 |
Main highlights (1)

Million euros
| 2022 | 2021 | 2020 restated | 2019 | 2018 | Chg. % 22/21
BALANCE SHEET |  |  |  |  |  |
Total assets | 89,861 | 92,905 | 85,715 | 81,643 | 75,923 | -3.3%
Equity | 5,921 | 7,062 | 7,386 | 7,381 | 6,964 | -16.2%
Loans and advances to customers (net) | 56,198 | 56,360 | 53,975 | 52,275 | 48,123 | -0.3%
Total customer funds | 92,808 | 90,097 | 84,492 | 81,675 | 74,023 | 3.0%
Balance sheet customer funds | 77,250 | 71,175 | 64,764 | 62,607 | 56,585 | 8.5%
Deposits and other resources from customers | 75,907 | 69,560 | 63,259 | 60,847 | 55,248 | 9.1%
Loans to customers (net) / Deposits and other resources from customers (2) | 74% | 81% | 85% | 86% | 87% |
Shareholders' equity and subordinated debt | 6,472 | 7,514 | 7,626 | 7,697 | 6,853 | -13.9%
RESULTS |  |  |  |  |  |
Net interest income | 2,150 | 1,589 | 1,532 | 1,549 | 1,424 | 35.3%
Net operating revenues (3) | 2,868 | 2,334 | 2,257 | 2,335 | 2,184 | 22.8%
Operating costs | 1,073 | 1,116 | 1,090 | 1,166 | 1,024 | -3.8%
Operating costs excluding specific items (3) | 1,057 | 1,025 | 1,044 | 1,100 | 995 | 3.1%
Results on modification | (310) | — | — | — | — | —%
Impairment and Provisions | 1,056 | 1,061 | 841 | 542 | 601 | -0.5%
Income tax | 304 | 204 | 132 | 239 | 138 |
Net income attributable to shareholders of the Bank | 207 | 138 | 183 | 302 | 301 | 50.3%
PROFITABILITY AND EFFICIENCY |  |  |  |  |  |
Net operating revenues / Average net assets (2) | 3.0% | 2.6% | 2.7% | 2.9% | 3.0% |
Return on average total assets (ROA) | 0.1% | —% | 0.2% | 0.5% | 0.6% |
Income before tax and non-controlling interests / Average net assets (2) | 0.5% | 0.3% | 0.4% | 0.8% | 0.8% |
Return on average shareholders' equity (ROE) | 4.0% | 2.4% | 3.1% | 5.1% | 5.2% |
Income before tax and non-controlling interests / Average equity (2) | 7.3% | 3.3% | 4.8% | 8.9% | 8.1% |
Net interest margin | 2.5% | 1.9% | 2.0% | 2.2% | 2.2% |
Cost to core income (3) | 36.2% | 44.2% | 47.3% | 48.8% | 47.2% |
Cost to income (2) | 37.4% | 47.8% | 48.3% | 49.9% | 46.9% |
Cost to income (2)(3) | 36.8% | 43.9% | 46.3% | 47.1% | 45.6% |
Cost to income - activity in Portugal (2)(3) | 37.0% | 42.6% | 46.2% | 47.4% | 46.5% |
Staff costs / Net operating revenues (2)(3) | 19.7% | 24.1% | 25.9% | 26.9% | 25.9% |
CREDIT QUALITY |  |  |  |  |  |
Non-performing exposures | 2,218 | 2,752 | 3,295 | 4,206 | 5,547 |
Non-performing exposures (loans to customers) / Loans to customers | 3.8% | 4.7% | 5.9% | 7.7% | 10.9% |
Total impairment (balance sheet) / NPE (loans to customers) | 68.3% | 68.0% | 62.9% | 58.2% | 52.4% |
Restructured loans | 1,866 | 2,564 | 2,661 | 3,097 | 3,598 |
Restructured loans / Loans to customers | 3.2% | 4.4% | 4.7% | 5.7% | 7.1% |
Cost of risk (net of recoveries) | 52 b.p. | 60 b.p. | 92 b.p. | 72 b.p. | 92 b.p. |
LIQUIDITY |  |  |  |  |  |
Liquidity Coverage Ratio (LCR) | 212% | 269% | 230% | 216% | 218% |
Net Stable Funding Ratio (NSFR) | 154% | 150% | 140% | 135% | 133% |
CAPITAL(4) |  |  |  |  |  |
Own funds fully-implemented | 7,241 | 7,247 | 7,213 | 7,028 | 5,663 |
Risk Weighted Assets fully-implemented | 43,106 | 45,863 | 46,322 | 44,972 | 41,819 |
Common equity tier I fully-implemented ratio | 12.5% | 11.7% | 12.2% | 12.2% | 12.0% |
Total fully implemented ratio | 16.8% | 15.8% | 15.6% | 15.6% | 13.5% |
Common equity tier I phased-in ratio | 12.6% | 11.7% | 12.2% | 12.2% | 12.1% |
BCP SHARE |  |  |  |  |  |
Market capitalisation (ordinary shares) | 2,213 | 2,130 | 1,862 | 3,065 | 3,469 | 3.9%
Adjusted basic and diluted earnings per share (euros) | 0.011 | 0.007 | 0.010 | 0.018 | 0.020 |
Market values per share (euros) |  |  |  |  |  |
High | 0.1982 | 0.1709 | 0.2108 | 0.2889 | 0.3339 |
Low | 0.1218 | 0.1126 | 0.0697 | 0.1771 | 0.2171 |
Close | 0.1464 | 0.1409 | 0.1232 | 0.2028 | 0.2295 |

2022 REPORT & ACCOUNTS |

|11
(1)Some indicators are presented according to management criteria of the Group, which concepts are described
and detailed at the glossary and at alternative performance measures chapter, being reconciled with the
accounting values in the respective chapters. From 31 May 2019, financial statements of the Group reflect the
consolidation of Euro Bank S.A., the entity acquired by Bank Millennium S.A. Following the sale, in 2021, of the
entire share capital of Banque Privée BCP (Suisse) SA to Union Bancaire Privée, UBP SA and the sale of 70% of the
investment held in Seguradora Internacional de Moçambique, S.A. (“SIM”), now designated Fidelidade Moçambique
- Companhia de Seguros S.A., through its subsidiary BIM - Banco Internacional de Moçambique S.A., the
contribution of these subsidiaries to the consolidated results of the Group, till the date of disposal, is reflected as
income from discontinued operations in the international activity and the historical information has been restated
since January 2020, in order to ensure its comparability, as defined in the IFRS 5. The accounting of assets and
liabilities of Banque Privée BCP (Suisse) S.A. and of SIM was not changed compared to the criteria considered in
the financial statements published in previous periods. In this context and taking into account the immateriality of
the balance sheet balances of these operations in the Group, the calculation of the indicators relating the
performance of the profit and loss account to the balance sheet items was not adjusted, with the exception of net
interest margin, that reflects the fact that the assets of that subsidiary were no longer considered interest earning
assets in historical information regarding 2021 and 2020.
(2)According to Instruction no. 16/2004 from the Bank of Portugal, as the existing version as of 31 December
2022.
(3)Excludes the impact, before taxes, of specific items: negative impact of 16 million euros in 2022, including: i)
the distribution of the Bank's 2021 results by the employees of the Bank, as approved at the General Meeting of
Banco Comercial Português, S.A., held on May 4, 2022; ii) costs with mortgage financing to former employees; iii)
discretionary remuneration paid to employees as a measure to offset the impacts of inflation; and iv) the
recognition of a provision for other structure adaptation measures. In 2021, the impact was also negative, in the
amount of 91 million euros, mainly related to the adjustment of headcount carried out by the Bank in that year,
including a provision in the amount of 84 million euros. In 2020, the impact was also negative, in the amount of 46
million euros, of which 32 million euros related to headcount adjustment costs, compensation cost for temporary
remuneration cuts of employees under the participation in the results and income arising from the agreement with
a former director of the Bank, and 15 million euros related to acquisition, merger and integration of Euro Bank
S.A. In 2019, the impact was also negative in the amount of 66 million euros, of which 40 million euros related to
headcount adjustment costs and costs with compensation for temporary remuneration cuts, and 26 million euros
related to acquisition, merger and integration of Euro Bank S.A. In 2018, the negative impact amounted to 29
million euros, of which 27 million euros related to headcount adjustment costs and 3 million euros associated with
the ongoing digital transformation project. The profitability and efficiency indicators does not consider the
specific items recognized in net operating revenues (1 million euros in 2019 and an immaterial amount in 2020),
related to costs with the acquisition, merger and integration of Euro Bank S.A.
(4)Presented figures include the cumulate net results of the respective periods.

| 2022 REPORT & ACCOUNTS

12 |
Information on BCP Group
Brief description
Banco Comercial Português, S.A. (BCP, Millennium
bcp or Bank) is the largest Portuguese private sector
bank. The Bank, with its decision centre in Portugal,
operates and acts with respect for people and
institutions, focusing on the Customer, pursuing a
mission of excellence, trust, ethics and
responsibility, and is a distinguished leader in
various financial business areas in the Portuguese
market and a reference institution on an
international level. The Bank also holds a prominent
position in Africa through its banking operation in
Mozambique (in Angola, Banco Millennium Angola -
BMA merged with Banco Privado Atlântico-BPA and
currently the Bank holds a equity accounted
shareholding) and in Europe through its banking
operation in Poland. Since 2010, the Bank operates
in Macau through a full branch.
Bank History
BCP was incorporated on 17 June 1985 as a limited
liability company ("sociedade anónima") organised
under the Portuguese laws, following the
deregulation of the Portuguese banking industry.
BCP was founded by a group of over 200
shareholders and a team of experienced banking
professionals who sought to capitalise on the
opportunity to form an independent financial
institution that would serve the then
underdeveloped Portuguese financial market more
effectively than state-owned banks.
While the Bank's development was initially
characterised by organic growth, a series of
strategic acquisitions helped solidify its position in
the Portuguese market and increase its offering of
financial products and services. In March 1995, BCP
acquired control of Banco Português do Atlântico,
S.A. ("Atlântico"), which was then the largest private
sector bank in Portugal. This was followed by a joint
takeover bid for the whole share capital of
Atlântico. In June 2000, Atlântico was merged into
BCP. In 2000, BCP also acquired Império, along with
Banco Mello and Banco Pinto & Sotto Mayor.
In 2004, with a view to strengthening its focus on
the core business of distribution of financial
products and optimising capital consumption, BCP
sold insurers Império Bonança, Seguro Directo,
Impergesto and Servicomercial to the Caixa Geral de
Depósitos group. BCP also entered into agreements
with Fortis (now named Ageas) for the sale of a
controlling stake and management control of
insurers Ocidental - Companhia Portuguesa de
Seguros, S.A., Ocidental - Companhia Portuguesa de
Seguros de Vida, S.A. and Médis - Companhia
Portuguesa de Seguros de Saúde, S.A., as well as the
pension fund manager PensõesGere - Sociedade
Gestora de Fundos de Pensões, S.A.
In 2004, the Bank sold its non-life insurance
businesses and divested a portion of its life
insurance business by entering into a joint venture
with Ageas (formerly Fortis), named Millenniumbcp
Ageas, of which 51% is held by Ageas and 49% by the
Bank.
After the consolidation of its position in the
Portuguese banking market, the Bank focused on the
development of its retail business in new regions,
with the goal of attaining significant positions in
emerging markets in Europe and in Africa. The Bank
concentrated on businesses with strong growth
prospects in foreign markets with a close historical
connection to Portugal or that have large
communities of Portuguese origin (such as Angola,
Mozambique, the United States, Canada, France,
Luxembourg and Macao), as well as in markets
where the Bank's successful Portuguese business
model could be effectively exported to and tailored
to suit such local markets (such as Poland, Greece
and Romania).
The Bank has pursued a consistent strategy of
market segmentation. Until 2003, these segments
were served through autonomous distribution
networks operating under a variety of brand names.
In October 2003, BCP began the process of replacing
these brands in Portugal with a single brand name:
Millennium bcp. The rebranding in other markets
was completed in 2006. All banking operations
controlled by BCP are now carried out under the
"Millennium" brand. In Portugal, the Bank also
operates under the "ActivoBank" brand.
In recent years, the Bank has refocused on
operations that it considers core to its business. As
part of this refocus, the Bank divested several of its
international operations (in France, Luxembourg,
United States, Canada, Greece, Turkey and
Romania), while retaining commercial protocols to
facilitate remittances from Portuguese emigrants in
some markets. In 2010, the Bank transformed its
Macao off-shore branch into an on-shore branch.
In February 2012, the Bank adopted a management
restructuring through the introduction of a one-tier
management and supervisory model, in which the
Board of Directors includes an Executive Committee
and an Audit Committee (the latter comprising non-
executive members, and with a majority of
independent members, in accordance with the
applicable law).
In December 2012, the Bank prepared and presented
to the Portuguese government a Restructuring Plan,
required by national law and by the applicable
European rules on matters of State aid. The
Restructuring Plan was formally submitted by the
Portuguese government to the EC and, In July 2013,

2022 REPORT & ACCOUNTS |

|13
the Bank agreed on the plan with the EC, entailing
an improvement of the profitability of the Bank in
Portugal through continued cost reduction, among
other drivers. On September 2013, the DG Comp
announced its formal decision in connection with its
agreement with the Portuguese authorities
concerning the Bank's Restructuring Plan. Pursuant
to the decision, the Bank's Restructuring Plan was
found in compliance with the European Union's rules
relating to State aid, demonstrating the Bank's
viability without continued State support. The
implemented Restructuring Plan aimed at
strengthening the Bank's strategy by focusing on its
core activities.
In May 2014, as part of a process to refocus on core
activities defined as a priority in its Strategic Plan,
the Bank announced that it agreed with the
international insurance group Ageas a partial recast
of the strategic partnership agreements entered into
in 2004, which included the sale of its 49% interest
in the (currently jointly owned) insurance companies
that operate exclusively in the non-life insurance
business, i.e. Ocidental – Companhia Portuguesa de
Seguros, S.A. and Médis – Companhia Portuguesa de
Seguros de Saúde, S.A..
In April 2016, the Bank announced the conclusion of
the merger between Banco Millennium Angola, S.A.
with Banco Privado Atlântico, S.A., resulting in the
second-largest private sector bank in Angola in
terms of loans to the economy, with a market share
of approximately 10% in business volume. The entity
resulting from this merger ceased to be controlled
by BCP.
In January 2017, BCP announced a Euros 1.3bn rights
issue with transferable pre-emptive subscription
rights. The aim of this transaction was to bring
forward the full repayment of remaining
Government Subscribed Securities and the removal
of key State-aid related restrictions, including the
dividend ban, the risk of potential sale of core
businesses and the tail risk of conversion. This
transaction was designed to strengthening the
balance sheet through the improvement of the CET1
FL ratio and Texas ratio, bringing them in line with
new industry benchmarks and above regulatory
requirements.
On December 27, 2019, the merger deed of Banco de
Investimento Imobiliário, S.A., a wholly-owned
subsidiary of Banco Comercial Português, S.A., by
incorporation into the latter, was signed, thus
completing the incorporation process of Banco de
Investimento Imobiliário, S.A. into Banco Comercial
Português, S.A..
On 27 August 2019, the Extraordinary General
Meeting of Bank Millennium S.A., in which 216
shareholders representing 78.53% of its share
capital, participated, approved the merger of Bank
Millennium S.A. with Euro Bank S.A.. The completion
of the integration of Eurobank S.A. into Bank
Millennium S.A. took place in November, with the
Bank resulting from the merger now operating under
a single brand, a single operating system and a
single legal entity.
On June 29, 2021 BCP entered into an agreement
with Union Bancaire Privée, UBP SA regarding the
sale of the entire share capital of Banque Privée BCP
(Suisse) SA (“Banque Privée”). The sale of the entire
share capital of Banque Privée BCP (Suisse) SA
(“Banque Privée”) to Union Bancaire Privée, UBP SA
was completed on November 2, 2021. The sale of
Banque Privée allows BCP Group to pursue its
strategy of focusing resources and management on
core geographies, enhancing their development and
thus creating value for stakeholders.
On 29 December 2021, BIM – Banco Internacional de
Moçambique, SA (a bank incorporated under
Mozambican law in which BCP indirectly holds a
stake of 66.69%) formalized the entry into force of a
long-term agreement with Fidelidade – Companhia
de Seguros, SA, with a view to strengthening
capabilities and expanding the offer of insurance
through the banking channel (bancassurance) in
Mozambique. Under this partnership, the possibility
of which was provided for in the memorandum of
understanding signed between BCP and the Fosun
Group in November 2016, BIM and Fidelidade also
formalized the sale by BIM to Fidelidade of shares
representing 70% of the share capital and voting
rights of Seguradora Internacional de Moçambique,
SA, with BIM maintaining approximately 22% of its
share capital. BIM and Fidelidade also agreed call
and put options with a view to enabling Fidelidade
to acquire additional shares, and BIM's shareholding,
as a result of these options, may be reduced to 9.9%
of SIM's capital. Under the long-term exclusive
distribution agreement, BIM will promote the
distribution of SIM insurance through the banking
channel, continuing to provide its customers with a
wide range of competitive insurance products, which
is reinforced by the partnership with Fidelidade, an
Insurance Group of reference.

| 2022 REPORT & ACCOUNTS

14 |
Governance

Banco Comercial Português, S.A. has a one-tier
management and supervision model, composed of
a Board of Directors (BD), which includes an
Executive Committee (EC) and an Audit Committee
composed of only non-executive directors. The
Company also has a Remuneration and Welfare
Board (RWB) and a Strategic Board.
In addition, the Group uses a Statutory Auditor and
an external auditing firm to audit the individual
and consolidated accounts of the Bank, elected at
the General Meeting.
The General Meeting is the highest governing body
of the company, representing all shareholders, and
its resolutions are binding for all when adopted
under the terms of law and the articles of
association. The General Meeting is responsible
for:
•Electing and dismissing the Board, as well as
the members of the management and
supervisory bodies, and the RWB;
•Approving amendments to the articles of
association;
•Resolving on the annual management report
and accounts for the year and proposed
appropriation of profits;
•Resolving on matters submitted upon request of
the management and supervisory bodies;
•Resolving on all issues especially entrusted to it
by the law or articles of association, or on
those not included in the duties of other
corporate bodies.
The BD is the governing body of the Bank with the
amplest powers of management and representation,
pursuant to the law and the articles of association.
Under the terms of the articles of association, the
BD is composed of a minimum of 15 and a maximum
of 19 members with and without executive duties,
elected by the General Meeting for a period of four
years, and can be re-elected. The current Board of
Directors is composed of 17 members, of which 15
were elected at the General Meeting that took place
on May 4, 2022. As a result of two members elected
at that meeting, due to personal unavailability, not
having taken office, the Board of Directors co-opted,
on May 11 October 2022, two members to join the
Board of Directors, the co-option having been
ratified at the General Meeting that took place on
December 20, 2022.
Of the 17 members that make up the BD, 6 are
executive and 11 are non-executive, with 5 qualified
as independent.
The BD began its functions on September 5, 2022
and appointed an EC, composed of six of its
members, with the Chief Executive Officer being
appointed by the General Meeting, with the two co-
opted members starting their duties on February 4,
2023. The BD has delegated to the EC the day-to-day
management of the Bank, which is assisted by
several committees and subcommittees in the
exercise of this management function, to which it
monitors certain relevant matters.
The supervision of the company is made by an Audit
Committee elected by the General Meeting of
Shareholders and composed of 3 to 5 elected
members. The lists proposed for the BD should
indicate the members to be part of the Audit
Committee and indicate the respective Chairperson.
The Committee also includes an alternate member,
co-opted by the BoD, whose exercise of the position
was authorized by the supervisor on February 14,
2023. As far as Audit Committee is concerned, the
non-executive directors are mostly independent.
The RWB is elected by the General Meeting.
The Company Secretary and the Alternate Secretary
are appointed by the Bank's BD, and their term-of-
office matches that of the BD that appointed them.

2022 REPORT & ACCOUNTS |

|15
Corporate Governance Model

| 2022 REPORT & ACCOUNTS

16 |
Identification and composition of the Corporate Bodies and Committees from
the Board of Directors
The General Shareholders' Meeting held on May 4, 2022 elected 17 of the current members of the Bank's Board of
Directors, and two were co-opted at a Board meeting held on October 11, 2022. The co-option was ratified at the
General Meeting that took place held on December 20, 2022, all members were elected to hold office for the
2022/2025 quadrennium.

| Board of Directors (BD) | Executive Committee (EC) | Audit Committee (AudC) | Remuneration and Welfare Board (RWB) | Board for Strategy * | Committee for Corporate Governance, Ethics and Sustainability (CCGES) | Committee for Nominations and Remunerations (CNR) | Committee for Risk Assessment (CRA)
Nuno Manuel da Silva Amado (Chairman of BD and of CGSES) |  |  |  |  |  |  |  |
Jorge Manuel Baptista Magalhães Correia (Vice- Chairman of BD and Member of RWB) |  |  |  |  |  |  |  |
Valter Rui Dias de Barros (Vice-Chairman of BD) |  |  |  |  |  |  |  |
Miguel Maya Dias Pinheiro (Vice- Chairman of BD) |  |  |  |  |  |  |  |
Ana Paula Alcobia Gray |  |  |  |  |  |  |  |
Cidália Maria da Mota Lopes (Chairman of AudC) |  |  |  |  |  |  |  |
Fernando da Costa Lima (Chairman of (CRA) |  |  |  |  |  |  |  |
João Nuno de Oliveira Jorge Palma |  |  |  |  |  |  |  |
Lingzi Yuan (Smilla Yuan) (Chairman of CNR) |  |  |  |  |  |  |  |
José Miguel Bensliman Schorcht da Silva Pessanha |  |  |  |  |  |  |  |
Lingjiang Xu |  |  |  |  |  |  |  |
Maria José Henriques Barreto de Matos de Campos |  |  |  |  |  |  |  |
Miguel de Campos Pereira de Bragança |  |  |  |  |  |  |  |
Rui Manuel da Silva Teixeira |  |  |  |  |  |  |  |
Xiao Xu Gu (Julia Gu) |  |  |  |  |  |  |  |
Altina de Fátima Sebastian Gonzalez ** |  |  |  |  |  |  |  |
José Pedro Rivera Ferreira Malaquias |  |  |  |  |  |  |  |
José António Figueiredo Almaça (Chairman of RWB) |  |  |  |  |  |  |  |

* The Board of Directors may, on a case-by-case basis, appoint up to five ad-hoc members, to choose from among the representatives of shareholders with qualified
holdings and other personalities of recognized merit linked to the topics that, at any given moment, are the object of analysis by part of the Strategic Board, and whose
functions will cease at the same time as the term of office of the Board of Directors expires.**

2022 REPORT & ACCOUNTS |

|17
Main events in 2022
In 2022, in the current demanding and challenging context, the Bank kept its focus on supporting households and
companies.
Following the geopolitical crisis with the invasion of Ukraine, the Bank acted in accordance with the guidelines of
the European Union and implemented a set of mechanisms to monitor measures to support the Ukrainian people.
In the scope of the Supervisory Review and Evaluation Process (SREP), BCP has been notified of the decision of the
European Central Bank (ECB) regarding minimum prudential requirements to be fulfilled on a consolidated basis
from March 1, 2022: CET1 9.16%, T1 11.13% and Total 13.75%.
The European Investment Bank (EIB) and Millennium bcp renewed their long-standing partnership through a signing
of an agreement to support SMEs, medium-sized companies and large Portuguese companies by providing a
guarantee of 200 million euros that aims to mobilize financing up to 840 million euros.
Bank Millennium (Poland) and the EIB Group, comprehending the European Investment Bank and the European
Investment Fund, came together to support Polish SMEs affected by the COVID-19 crisis through a guarantee of 1.5
billion Zlotys.
Conclusion on May 4, 2022 of the Annual General Meeting of Shareholders, with 64.31% of the share capital
represented, with the following resolutions:
•Approval of the individual and consolidated Annual Report, balance sheet and financial statements of 2021, and
the Corporate Governance Report, that includes a chapter on the remuneration of the management and
supervisory bodies and the Sustainability Report; and approval of the proposal for the appropriation of profit
concerning the 2021 financial year;
•Approval of the updating of the policy for the remuneration of Members of the Management and Supervisory
Bodies; approval of the update of the internal policy for the selection and assessment of the suitability of the
Members of the Management and Supervisory Bodies and Key-functions Holders; approval of the update of the
policy for selection and appointment of the Statutory Auditor or audit firm and the hiring of non-prohibited non-
audit services, under the terms of the legislation in force; and approval of the proposal to amend the articles of
association of the Bank;
•Election of the Board of Directors, including the Audit Committee and of the Remunerations and Welfare Board,
for the term-of-office 2022/2025.
BCP has been notified by the Bank of Portugal, as the national resolution authority, about the establishment of its
minimum requirement for own funds and eligible liabilities ("MREL" or "Minimum Requirement for own funds and
Eligible Liabilities") as decided by the Single Resolution Board. The resolution strategy applied continues to be that
of a multiple point of entry ("MPE"). The MREL requirements to be met by BCP Group of Resolution (consisting of
BCP, S.A., Banco ActivoBank, S.A. and all the subsidiary companies of BCP apart from Bank Millennium S.A. and
Banco Internacional de Moçambique and their respective subsidiaries), from 1 January 2024 is of:
•23.81% of the total risk exposure amount ("TREA") (to which adds further a combined buffer requirement ("CBR")
of 3.5%, thus corresponding to total requirements of 27.31%); and
• 6.92% of the leverage ratio exposure measure ("LRE").
Until the date mentioned before, BCP should comply with an interim requirement of:
•18.09% of TREA (to which adds a further 3.25% CBR requirement, thus corresponding to a total requirement of
21.34%); and
•6.92% of the LRE.
No subordination requirements have been applied to the Bank. In accordance with the regulations in force, MREL
requirements must be updated or reconfirmed annually. The MREL requirements, now communicated to the BCP
resolution group described above, are in line with the 2021-24 Strategic Plan and are accommodated by the
ongoing funding plan. As of January 1, 2022, BCP complied to the intermediate MREL requirement set for that
date, both as a percentage of the TREA (also including the applicable CBR) and as a percentage of the LRE.
Considering that the Regulations of the Statutory Auditors Association foresees that the maximum exercise period
of a partner responsible for the guidance of the statutory audit of an auditor is seven years and that Paulo
Alexandre de Sá Fernandes, ROC no. 1456, registered with the CMVM under no. 20161066, is the partner of

| 2022 REPORT & ACCOUNTS

18 |
Deloitte & Associados - Sociedade de Revisores Oficiais de Contas, S.A. (“Deloitte”) responsible for the statutory
and external auditing of the Bank since 2016, BCP disclosed that it was informed on July 21 by Deloitte that, from
that date on, João Carlos Henriques Gomes Ferreira, ROC no. 1129, registered with the CMVM under no. 20160741,
became responsible for the statutory and external auditing of Banco Comercial Português, S.A..
Following receipt of the letter from the European Central Bank on the assessment of the suitability of the
members of the Board of Directors and the Audit Committee elected at the General Shareholders' Meeting of May
4, 2022, for the four-year period 2022/2025, the Board of Directors began its functions on September 5, 2022.
Clara Raposo and Teófilo da Fonseca were not subject to this assessment since they informed that, for personal
reasons, they were not available to serve on the Board of Directors. On October 11, BCP informed that its Board of
Directors, in accordance with the law and the Bank's regulations on Succession Planning, approved that day the co-
optation of Prof. Altina Sebastián and Mr. Pedro Ferreira Malaquias as independent non-executive directors of the
Bank, thus filling the vacancies on the Board of Directors. The co-optation was subject to the suspensive condition
of obtaining authorization from the European Central Bank to exercise their functions and was ratified at the
Bank's General Meeting which took place on December 20, 2022.
On July 15, 2022, the Bank informed that due to expected costs of credit holidays the Bank posted a negative net
result in the 3rd quarter of 2022 and as a result its capital ratios fell below the current minimum requirements set
by Polish Financial Supervision Authority (‘PFSA’). As the breach of respective capital ratios represents a
prerequisite stipulated in the art. 142 sec. 1 and 2 of the Banking Act of 29 August 1997 (Journal of Laws 2021,
item 2439, i.e. 28 December 2021, as amended), on July 15, 2022 the Management Board of the Bank took a
decision to launch the Recovery Plan, notifying of the fact both PFSA and the Bank Guarantee Fund.
Moody’s Rating Agency, as part of its regular revision, upgraded BCP's senior unsecured debt ratings to Investment
Grade, from Ba1/Prime-2 to Baa3/Prime-2, driven by the reduction in the stock of Non-performing assets (NPA)
and the improvement in capitalization levels over the last years, the improvement in domestic profitability, which
offsets the impact of provisions for legal risk in Poland, as well as the BCP’s funding plan being executed to
comply with its Minimum Requirement for own funds and Eligible Liabilities (MREL).
Moody`s Rating Agency assigned a rating of Baa3, corresponding to investment grade, to Bank Millennium's senior
non-preferred debt in Poland, within the scope of the Euro Medium Term Notes (EMTN) program.
S&P Global Ratings upgraded BCP’s long-term issuer credit rating by one notch to ‘BB+’, keeping the Outlook
stable. This upgrade follows the upgrade on the sovereign rating, as well as the recent improvement of BCP credit
risk profile, result of the 40% reduction in NPEs since 2019 and the expectations from S&P Global Ratings that the
uncertainties in Poland will have a manageable impact on the level of the Bank’s capitalization. The stable
Outlook reflects the Bank’s solid retail franchise.
Fitch Rating Agency revised the Outlook for BCP's rating from stable to positive, maintaining the long-term rating
at BB. The revision of the outlook reflected the organic reduction in non-performing assets since the end of 2019,
as well as the lower uncertainty about the provisioning related to mortgage loans denominated in CHF of Bank
Millennium.
On 18 October 2022, Banco Comercial Português, S.A. has fixed the terms for a new issue of senior preferred debt
securities eligible for MREL (Minimum Requirement for own funds and Eligible Liabilities), under its Euro Note
Programme. The issue, in the amount of 350 million euros, has a tenor of 3 years, with the option of early
redemption by the Bank at the end of year 2, an issue price of 100% and an annual interest rate of 8.5% during the
first 2 years (corresponding to a spread of 5.547% over the 2-year mid-swap rate). The annual interest rate for the
3th year was set at 3-month Euribor plus a 5.547% spread. The high demand and the diversified profile of the
investors who subscribed the issue confirmed, once again, the Bank's ability to access capital market in a context
of high volatility and great uncertainty.
The Board of Directors, at its meeting held on 14 November 2022, resolved to request the calling of a General
Meeting of Shareholders to take place on 20 December, with the following Agenda:
Item One – To resolve on altering article 4 (1) of the articles of association (Share Capital) aiming at reformulating
the items of own capital, comprising the reinforcement of funds subject to regulatory qualification as
distributable by means of the reduction of the share capital in 1,725,000,000 euros, without changing either the
existing number of shares or net equity;
Item Two – To resolve on the ratification of the co-optation by the Board of Directors of 2 Directors for the term-
of-office 2022/2025;
Item Three – To resolve upon the election of an alternate member of the Audit Committee for the 2022/2025
term-of-office.

2022 REPORT & ACCOUNTS |

|19
On 22 November 2022, Banco Comercial Português, S.A. informed it has decided not to exercise the early
redemption option on its €300,000,000 4.50% T2 Subordinated Fixed Rate Reset Notes due December 2027 (ISIN:
PTBCPWOM0034) (the “Notes”) on its one-time call date (7 December 2022). As such, and in accordance with the
Final Terms, the coupon will reset to the aggregate of the 5-year Mid-Swap Rate prevailing on 5 December 2022
and the initial margin of 4.267% per annum.
In light of BCP’s decision not to call the Notes, BCP also announced the launch of an exchange offer, offering to
the current holders of its issue €300,000,000 4.50% T2 Subordinated Fixed Rate Reset Notes due December 2027
the option and opportunity to exchange their holdings for new Euro denominated T2 Notes.
BCP informed about the results of the Offer, which expired at 4:00 p.m. on 29 November 2022, having received
valid offers for exchange by noteholders for an aggregate nominal amount of €133,700,000.00. On 5 December
2022, BCP issued New Notes in the same amount, subscribed by those noteholders that validly offered Notes for
exchange.
The New Notes, in the amount of €133,700,000.00, have a tenor of 10.25 years, with the option of early
redemption by the Bank during a period of three months at the end of year 5, and fixed annual interest rate of
8.75% during the first 5.25 years. The annual interest rate from year 5.25 onwards was set at the 5-year mid-swap
rate plus a 6.051%.
On 20 December 2022, Banco Comercial Português, S.A. concluded, through electronic means and, simultaneously,
at the Bank's facilities, with 63.57% of the share capital represented, the General Meeting of Shareholders, with
the following resolutions:
Item One – Approval of the amendment to article 4 (1) of the articles of association (Share Capital) aiming at the
special purpose of reformulating the items of equity, comprising the reinforcement of funds able of being
regulatory qualified as distributable by means of the reduction of the share capital in 1,725,000,000 euros,
without changing either the existing number of shares or net equity;
Item Two - Ratification of the co-optation by the Board of Directors of 2 Directors for the 2022/2025 term of
office;
Item Three - Election of an alternate member of the Audit Committee for the term of office 2022/2025.
On 21 December 2022, Banco Comercial Português, S.A. informed that, under the context of the Supervisory
Review and Evaluation Process (SREP), it has been notified of the decision of the European Central Bank regarding
minimum prudential requirements to be fulfilled on a consolidated basis from January 1, 2023.
BCP was previously informed by the Bank of Portugal on its capital buffer requirement as “other systemically
important institution” (O-SII).
The ECB’s decision prescribes the following minimum ratios as a percentage of total risk weighted assets (RWA)
from January 1, 2023: CET1 9.41%, Tier 1 11.38% and Total 14%, of which P1, respectively, 4.5%, 6% and 8% and
P2R, respectively, 1.41%, 1.88% and 2.5%.
Buffers include the conservation buffer (2.5%), the countercyclical buffer (0%) and the buffer for other
systemically important institutions (O-SII: 1.0%).
On 23 December 2022, Banco Comercial Português, S.A., in accordance with article 29-K of the Portuguese
Securities Code and article 1 of the CMVM Regulation no. 5/2008, hereby informed that, pursuant to the
resolutions adopted at the General Meeting of the Bank held on November 20th, 2022, the Bank registered its new
share capital of 3,000,000,000 Euros at the Commercial Registry Office, maintaining the number of nominative,
book-entry shares without nominal value and of the voting rights at 15,113,989,952.
In the same date and pursuant to article 3, paragraph b) of the CMVM Regulation no. 5/2008, the Bank also
informed that, effective as of that date, the Company Secretary function is performed by Ana Patrícia Moniz
Macedo and the Alternate Company Secretary function is performed by António Augusto Amaral de Medeiros.
On 29 December 2022, Banco Comercial Português, S.A. informed that after the conclusion, on 12 August 2022, of
the sale and purchase agreements and other agreements with a related company of Davidson Kempner Capital
Management LP (the "Purchaser"), together with Novo Banco, S.A., Caixa Geral de Depósitos, S.A., Banco
Santander Totta, S.A. and Oitante, S.A. (the "Sellers"), proceeded to the closing of the Project Crow and the
implementation of the Agreements were concluded on 29 December 2022, following the verification of the
stipulated contractual conditions precedent.

| 2022 REPORT & ACCOUNTS

20 |
As a result of the closing of the Project Crow:
•the Sellers’ units in “Fundo de Recuperação Turismo, Fundo de Capital de Risco (“FRT”) together with the assets
directly and indirectly held by FRT were transferred to the Purchaser;
•the Sellers’ share in “FLIT – PTREL, SICAV-SIF, S.C.A. (“FLIT”) together with the assets directly and indirectly
held by FLIT were transferred to the Purchaser;
•certain hospitality assets indirectly held by Fundo Recuperação, FCR were indirectly acquired by FLIT;
•certain assets indirectly held by FLIT and FRT were transferred to relevant Sellers.
AWARDS AND DISTINCTIONS
Bank #1 in the 2023 5 Stars Award and Consumer Choice 2023, in the “Large Banks” category, in the last one, for
the third consecutive year.
In 2022, the BCP Group was included again in The Sustainability Yearbook, a publication edited by S&P.
Millennium bcp is part of the Bloomberg Gender-Equality Index for the third consecutive year.
Best Investment Bank, in Portugal, in 2022, for the fourth consecutive year, according to Global Finance.
Best Foreign Exchange Provider, in Portugal, in 2022, according to Global Finance.
Millennium bcp wins Inovadora COTEC status for the second consecutive year, supporting more than 360
companies to achieve the status Inovadora COTEC.
Millennium bcp was distinguished as Best Bank for Sustainable Finance in Portugal in 2022, according to Global
Finance.
Millennium bcp was once again distinguished as one of leading companies in the fight against climate change,
according to “Europe’s Climate Leaders 2022” ranking published by the Financial Times and Statista.
Best Consumer Digital Bank, in Portugal, in 2022, according to Global Finance. In addition to this category, BCP
also won in three other categories: The Best Information Security and Fraud Management in Western Europe for
2022 (consumer); The Best in Social Media Marketing and Services in Western Europe for 2022 (Consumer) and The
Best Information Security and Fraud Management in Western Europe for 2022 (Corporate).
iziBizi won the Best Digital Transformation Project in Portugal. iziBizi was also distinguished with the Best Banking
Project" and Best Future of Business Models Project awards. iziBizi is the first invoicing management program with
a bank account, which merges Cloudware invoicing and management software with Millennium bcp's financial
services and Open Banking API.
Distinction at the Euronext Lisbon Awards with the Local Market Member in Equity and Growing Structured Finance
awards.
ActivoBank distinguished with Consumer Choice, in the “Digital Banking” category, for the fifth consecutive year.
ActivoBank distinguished as Powerful Brand, in the “Online Banking” category, in the joint study of Sábado
magazine and Marktest, by the second consecutive year.
Bank Millennium is Best Bank in Poland in 2022, according to Global Finance.
Bank Millennium distinguished as the Best Digital Bank in Poland in 2022, according to Global Finance.
Bank Millennium distinguished with the Kantar Polska Award for the most effective brand communication.
Bank Millennium among Poland’s Best Employers in 2022 according to the ranking prepared by Forbes Polska and
Statista.
Bank Millennium distinguished as the best Digital Bank in the Newsweek´s Friendly Bank ranking.
Bank Millennium distinguished as "Europe's Diversity Leader 2023" in the Financial Times ranking.
Best Trade Finance Provider, in Mozambique, in 2022, according to Global Finance.

2022 REPORT & ACCOUNTS |

|21
Bank of the Year in Mozambique, in 2022, by Euromoney.
Bank of the Year in Mozambique, in 2022, by The Banker magazine.
“Best Digital Bank” in Mozambique and “Most Innovative Digital Bank in Africa”, according to Global Finance.
"Best Private Bank" in Mozambique, for the fourth consecutive year, according to Global Finance.
SUBSEQUENT EVENTS
On 9 January 2023, in addition to the announcement made on December 29, 2022, on the conclusion of the Crow
Project, regarding the sale of Participation Units in the Fundo de Recuperação Turismo, Fundo de Capital de Risco
and FLIT-PTREL-SIF, S.C.A., as well as other assets of the hospitality sector, Banco Comercial Português, S.A.
informed that the completion of this transaction resulted in the receipt of approximately 233 million euros.
Based on the terms of the transaction, Banco Comercial Português, S.A informed that the conclusion of the Crow
project had a positive marginal impact of 1.6 million euros on the consolidated results for the year 2022. In terms
of capital ratio (CET1 fully implemented), the reduction in exposure on the balance sheet to these assets, due to
the sales made, was reflected in an increase of approximately 15 bps.
On March 17, 2023, Fitch Ratings upgraded its long-term deposits rating on BCP to ‘BBB-’ and the long-term Issuer
Default Rating to ‘BB+’, with a stable Outlook.
On March 24, 2023, BCP was notified of the favourable decision of the supervisory authority on the request for the
application of article 352 (2) of the CRR for the exclusion of the calculation of weighted assets for market risk of
certain structural exchange positions for hedging of regulatory ratios against changes in exchange rates. The
change has an estimated impact on the fully implemented CET1 ratio of around 50 basis points and of around 70
basis points in the total capital ratio.

| 2022 REPORT & ACCOUNTS

22 |
BCP Share

In 2022, financial markets performance was
strongly conditioned by political/military tensions
associated with the invasion of Ukraine by Russia,
by the increase in inflation worldwide, related to
disruptions in supply chains, and by decisions of
the main central banks with the increase in
interest rates, as well as fears of a sharp slowdown
in GDP in Europe and the US, increasing fears of a
recession in these two continents.
It is important to highlight that the increase in
world inflation in 2022, led the main central banks
to increase reference rates. In July, the ECB began
the cycle of raising reference rates, which reached
2.5% at the end of the year, in line with the
practice of the FED, which began its cycle of
increases in March, with the rate reaching 4.5% at
the end of the year.
In Europe, inflation reached very high levels in
2022, standing at 10.1% at the end of the year.
Recent macroeconomic data have shown a slight
slowdown in the rise in inflation, although this
slowdown remains below market expectations.
This trend is confirmed by the slowdown in the
producer price index in December almost in all
European countries.
Speeches by both ECB President Christine Lagarde
and Fed President Jerome Powell have dampened
investor sentiment. Both have maintained their
commitment to combating inflation, stating that
there is still a long way to go until inflation
reaches target values, thus prolonging the cycle of
rising interest rates.
As a result of the previously mentioned, 2022
turned out to be a year in which the performance
of the financial markets was strongly conditioned
by the macroeconomic and geopolitical
environment, which contributed to the drop in
stock market indices, to the rise in sovereign debt
yields and to the increase in the credit risk
premium.
Despite the volatility of the markets, the national
reference index (PSI) recorded a 2.8%
appreciation, while the Eurostoxx 600 recorded a
3.2% devaluation. In the United States, the S&P
500 recorded a devaluation of 19.9%, posted the
worst performance since 2008.
With regard to the banking sector, the
environment of rising interest rates was positive in
terms of net interest income, helping to mitigate
losses compared to other sectors.

2022 REPORT & ACCOUNTS |

|23
BCP SHARES INDICATORS

| Units | 2022 | 2021
ADJUSTED PRICES |  |  |
Maximum price | (€) | 0.1982 | 0.1709
Average price | (€) | 0.1549 | 0.1355
Minimum price | (€) | 0.1218 | 0.1126
Closing price | (€) | 0.1464 | 0.1409
SHARES AND EQUITY |  |  |
Number of ordinary shares (outstanding) | (M) | 15,114 | 15,114
Shareholder's Equity attributable to the group | (M€) | 5,138 | 6,119
Shareholder's Equity attributable to ordinary shares (1) | (M€) | 5,138 | 6,119
VALUE PER SHARE |  |  |
Adjusted net income (EPS) (1) | (€) | 0.011 | 0.007
Book value (2) | (€) | 0.314 | 0.378
MARKET INDICATORS |  |  |
Closing price to book value | (PBV) | 0.43 | 0.35
Market capitalisation (closing price) | (M€) | 2,213 | 2,130
LIQUIDITY |  |  |
Turnover | (M€) | 3,728 | 1,932
Average daily turnover | (M€) | 14.5 | 7.5
Volume | (M) | 23,717 | 13,989
Average daily volume | (M) | 92.3 | 54.2
Capital rotation (3) | (%) | 156.9% | 92.6%

(1)Based on the average number of shares outstanding
(2)Based on the average number of shares minus the number of treasury shares in portfolio
(3)Total number of shares traded divided by the average number of shares issued in the period
BCP share ended 2022 with an appreciation of 3.9%, which compares with a 3.2% depreciation of the European
bank index.
The performance of the BCP share in 2022 was conditioned, like the performance in financial markets in general,
by the political-military tensions associated with the invasion of Ukraine by Russia, by the increase in inflation
worldwide, by the monetary policy decisions of the main central banks, as well as fears of a sharp deceleration of
GDP in Europe and the US. The evolution of the BCP share was also influenced by additional factors of uncertainty,
related to the evolution of mortgage credits granted in foreign currency associated with the Polish operation, as
well as by extraordinary measures taken by the Polish government, as was the case of the moratorium on the
mortgage credit approved in July 2022.
Based on analysts who regularly monitor BCP, at the end of 2022, buy recommendations represented 45% vs. 62%
at the end of 2021. 45% of analysts have a neutral recommendation vs. 23% in December 2021 and 10% of analysts
recommend selling the stock vs 15% at the end of 2021.
The average price target for the BCP share at the end of 2022, after several upward revisions, stood at €0.21,
which compares favourably to the price target of €0.18 recorded at the end of 2021, corresponding to a variation
of +16.7% year-on-year.

| 2022 REPORT & ACCOUNTS

24 |
Positive impacts:
Intrinsic to BCP:
•Release of 2021 results, with the results of the 2022 quarters exceeding analysts' expectations, showing the
strength of the business model in a challenging context;
•Upward revision, by several analysts, of the BCP share price target.
Extrinsic to BCP:
•Beginning of interest rate hikes, starting in June 2021, by the ECB;
•Continuation of interest rate hikes by the Polish Central Bank, with the last increase taking place in December
2022;
•Lifting of the Covid-zero policy in China after a long period in which restrictions on the Chinese population;
•Upward revision of macroeconomic projections for Portugal included in the 2023 State Budget.
Negative impacts:
Intrinsic to BCP:
•Provisioning in Poland, to face the legal risks associated with the portfolio of mortgage loans granted in foreign
currency;
•Additional provisioning by Bank Millennium in the first half of 2022 accounts, to face the extraordinary measures
of the Polish government, namely the moratorium on mortgage credit.
Extrinsic to BCP:
•High levels of provisioning in Poland, to face the legal risks associated with the portfolio of mortgage loans
granted in foreign currency;
•Additional levels of provisioning in Poland, to face the extraordinary measures of the Polish government, namely
the moratorium on mortgage credit, approved in July 2022.Military political tension between Ukraine and Russia;
•Increased inflation worldwide related to disruptions in supply chains;
•Fears of a possible scenario of economic recession in Europe and the USA;
•Extraordinary measures taken by the Polish government aimed at protecting debtors in Poland, which has been
experiencing a scenario of high inflation and a significant increase in reference interest rates.

2022 REPORT & ACCOUNTS |

|25
PERFORMANCE

Index | Change 2022
BCP share | 3.9%
Eurostoxx 600 Banks | -3.2%
PSI20 | 2.8%
IBEX 35 | -5.6%
CAC 40 | -9.5%
DAX XETRA | -12.4%
FTSE 100 | 0.9%
MIB FTSE | -13.3%
Dow Jones Indu Average | -9.1%
Nasdaq | -33.6%
S&P500 | -19.9%
Source: Euronext, Reuters, Bloomberg |

Liquidity
During 2022, 3,728 million euros in BCP shares were traded, which represented an average daily turnover of 14.5
million euros. In 2022, 23,717 million shares were traded, corresponding to an average daily volume of 92.3 million
shares. The capital turnover ratio stood at 156.9% of the average annual number of shares issued.
Follow-up with Investors
During 2022, the Bank participated in several events, having been present at 8 conferences (5 face-to-face) and 7
roadshows (4 face-to-face), where it held institutional presentations, one-on-one meetings and group meetings with
investors. In 2022, around 200 meetings were held with institutional investors, which continues to demonstrate the
interest of those investors in BCP.
Indexes listing BCP shares
BCP shares are part of more than 50 national and international stock indexes, among which the Euronext 150, the PSI
and the PSI All-Share Index GR stand out.
Additionally, at the end of 2022, Millennium bcp was also included in the following Sustainability indices: “European
Banks Index”, “EURO STOXX Total Market ESG-X”, “STOXX® Developed Markets Total Market ESG-X” and “STOXX Europe
Total Market ESG-X”. Bank Millennium, in Poland, is also part of the “WIG-ESG” of the Warsaw Stock Exchange. In 2023,
the BCP Group was included, for the 4th consecutive year, in the Bloomberg Gender-Equality Index.

Sustainability Indexes

| 2022 REPORT & ACCOUNTS

26 |
Material information announced to the market and impact on the share price
The following table summarizes the relevant facts directly related to Banco Comercial Português that occurred
during the year 2022, as well as the changes in the share price, both on the following day and in the 5 subsequent
days, and the relative evolution vis-à-vis the main national reference indices and European banking sector in the
periods mentioned.

Nr. | Date | Material Events | Chg. +1D | Chg. vs. PSI20 (1D) | Chg. vs. STOXX® Europe 600 Banks (1D) | Chg. +5D | Chg. vs PSI20 (5D) | Chg. vs STOXX® Europe 600 Banks (5D)
1 | 17/Jan | Banco Comercial Português, S.A. informs about calendar of events in 2022 | -1.5% | -1.2% | -0.7% | -11.7% | -8.0% | -3.8%
2 | 26/Jan | Banco Comercial Português, S.A. informs about provisions for FX-denominated mortgage loans booked by Bank Millennium, S.A. | -0.6% | -1.3% | -1.9% | 5.5% | 3.6% | 2.4%
3 | 4/Feb | Banco Comercial Português, S.A. informs about minimum prudential requirements | 2.4% | 2.4% | 0.8% | 5.5% | 5.8% | 1.5%
4 | 28/Feb | Millennium bcp Earnings release as at 31 December 2021 | -6.7% | -5.6% | -1.1% | -23.1% | -20.1% | -8.2%
5 | 30/Mar | Banco Comercial Português, S.A. informs about notice of acquisition of securities | -0.7% | -1.2% | 1.4% | -7.4% | -8.4% | -2.8%
6 | 1/Apr | Banco Comercial Português, S.A. informs about notice of acquisition of securities | -0.3% | -0.5% | 0.0% | -5.0% | -6.9% | -3.0%
7 | 13/Apr | Banco Comercial Português, S.A. informs about provisions for FX-denominated mortgage loans booked by Bank Millennium, S.A. | 5.3% | 4.5% | 4.3% | 8.1% | 7.4% | 4.9%
8 | 19/Apr | Banco Comercial Português, S.A. informs about notice of acquisition of securities | 3.1% | 2.8% | 1.0% | -10.2% | -6.2% | -5.9%
9 | 26/Apr | Banco Comercial Português, S.A. informs about Bank Millennium (Poland) results in Q1 2022 | -3.2% | -3.6% | -3.4% | -1.8% | -2.2% | -4.3%
10 | 4/May | Banco Comercial Português, S.A. informs about resolutions of the Annual General Meeting | -1.8% | -1.1% | 0.1% | 2.4% | 3.1% | 5.3%
11 | 10/May | Banco Comercial Português, S.A. informs on the payment of the dividend relating to the 2021 financial year | 3.2% | 2.0% | 0.9% | 13.2% | 11.2% | 7.3%
12 | 11/May | Banco Comercial Português, S.A. informs on notification by Banco de Portugal of its MREL requirements | -1.1% | 1.2% | -0.5% | 11.8% | 11.1% | 8.8%

(Continues)

2022 REPORT & ACCOUNTS |

|27
(Continuation)

Nr. | Date | Material Events | Chg. +1D | Chg. vs. PSI20 (1D) | Chg. vs. STOXX® Europe 600 Banks (1D) | Chg. +5D | Chg. vs PSI20 (5D) | Chg. vs STOXX® Europe 600 Banks (5D)
13 | 16/May | Millennium bcp Earnings release as at 31 March 2022 | 6.9% | 5.3% | 5.0% | 17.1% | 11.2% | 13.8%
14 | 19/May | Banco Comercial Português, S.A. informs about notice of acquisition of securities | -1.9% | -2.2% | -2.1% | 11.3% | 4.5% | 5.9%
15 | 14/Jun | Banco Comercial Português, S.A. informs about the upgrade to Investment Grade of senior unsecured debt ratings by Moody’s | 2.8% | 2.4% | 0.5% | 6.3% | 6.9% | 2.6%
16 | 27/Jun | Banco Comercial Português, S.A. informs about granting of shares to the Executive Directors and Managers | 0.9% | -1.1% | 0.3% | -8.4% | -8.3% | -5.1%
17 | 30/Jun | For the second consecutive year, Millennium bcp is the #1 Bank for Innovative Companies | -1.9% | -2.1% | -1.5% | -8.0% | -6.7% | -7.5%
18 | 8/Jul | Banco Comercial Português, S.A. informs about provisions for FX-denominated mortgage loans booked by Bank Millennium, S.A. | -2.2% | -2.3% | -0.6% | -6.9% | -5.6% | -1.7%
19 | 15/Jul | Banco Comercial Português, S.A. informs about provisions for FX-denominated mortgage loans booked by Bank Millennium, S.A. | 2.0% | 1.1% | -0.2% | -0.1% | -0.4% | -3.3%
20 | 21/Jul | Banco Comercial Português, S.A. Informs about expected negative impact of credit holidays on 3rd quarter 2022 results of Bank Millennium S.A. Capital Group and launching of the Recovery Plan | -3.7% | -4.6% | -2.4% | 0.1% | -4.6% | -0.4%
21 | 26/Jul | Banco Comercial Português, S.A. informs about Bank Millennium (Poland) results in H1 2022 | 6.3% | 4.3% | 5.3% | 1.3% | 0.0% | -1.9%
22 | 27/Jul | Millennium bcp Earnings release at 30 June 2022 | -2.1% | -2.8% | -1.7% | -5.1% | -3.7% | -8.9%
23 | 17/Aug | Banco Comercial Português, S.A. informs about notice of acquisition of securities | -0.5% | -0.5% | -0.1% | -4.1% | -3.8% | 0.3%

(Continues)

| 2022 REPORT & ACCOUNTS

28 |
(Continuation)

Nr. | Date | Material Events | Chg. +1D | Chg. vs. PSI20 (1D) | Chg. vs. STOXX® Europe 600 Banks (1D) | Chg. +5D | Chg. vs PSI20 (5D) | Chg. vs STOXX® Europe 600 Banks (5D)
24 | 5/Sep | Banco Comercial Português, S.A.'s new Board of Directors begins functions for the four-year period 2022/2025 | 0.3% | 1.0% | -0.3% | 4.7% | 3.5% | -2.3%
25 | 16/Sep | Banco Comercial Português, S.A. informs about upgrade of long-term issuer credit rating to 'BB+' by S&P Global Ratings | 0.0% | 0.1% | 0.2% | -5.2% | 0.9% | -1.0%
26 | 7/Oct | Banco Comercial Português, S.A. informs about significant items impacting 3rd quarter 2022 financial results of Bank Millennium, S.A. | -1.0% | -0.2% | -0.6% | 7.3% | 7.6% | 6.0%
27 | 11/Oct | Banco Comercial Português, S.A. informs on the co-optation of new non-executive Directors, subject to authorization by the European Central Bank | 0.2% | 2.0% | 1.2% | 2.7% | 0.6% | -3.2%
28 | 18/Oct | Banco Comercial Português, S.A. informs about issue of senior preferred debt securities eligible for MREL | 1.7% | 1.2% | 1.4% | 9.6% | 5.0% | 7.7%
29 | 19/Oct | Banco Comercial Português, S.A. informs about notice of acquisition of securities | 1.4% | 0.7% | 0.8% | 4.6% | -0.3% | 3.2%
30 | 24/Oct | Banco Comercial Português, S.A. informs about Bank Millennium (Poland) results in 9M 2022 | 6.6% | 5.0% | 6.9% | 7.4% | 4.6% | 6.9%
31 | 31/Oct | Millennium bcp Earnings release at 30 September 2022 | 8.5% | 6.6% | 7.6% | 1.1% | 0.3% | -2.6%
32 | 9/Nov | Banco Comercial Português, S.A. informs about notice of acquisition of securities | -0.7% | -1.5% | -1.4% | 8.2% | 8.1% | 6.6%
33 | 14/Nov | Banco Comercial Português, S.A. informs on resolution adopted by the Board of Directors | 1.5% | 0.9% | 0.6% | -0.3% | 0.0% | -1.9%
34 | 22/Nov | Banco Comercial Português, S.A. informs about the decision of not exercise the early redemption option on its T2 Notes due December 2027 and about the announcement of an exchange offer on the same issue | -0.3% | -0.7% | -0.9% | -0.2% | 0.1% | -1.9%
35 | 30/Nov | Banco Comercial Português, S.A. informs about the results of the exchange offer relating to its T2 Notes due December 2027 | 0.2% | 0.0% | -0.5% | 0.1% | 0.3% | -1.1%

(Continues)

2022 REPORT & ACCOUNTS |

|29
(Continuation)

Nr. | Date | Material Events | Chg. +1D | Chg. vs. PSI20 (1D) | Chg. vs. STOXX® Europe 600 Banks (1D) | Chg. +5D | Chg. vs PSI20 (5D) | Chg. vs STOXX® Europe 600 Banks (5D)
36 | 7/Dec | Banco Comercial Português, S.A. informs about notice of acquisition of securities | -1.3% | -0.4% | -0.5% | -2.9% | -1.9% | -3.8%
37 | 20/Dec | Banco Comercial Português, S.A. informs about resolutions of the General Meeting | -0.8% | 0.2% | -0.5% | -2.5% | -2.2% | -3.9%
38 | 21/Dec | Banco Comercial Português, S.A. informs about minimum prudential requirements | -0.1% | -0.5% | -1.7% | 0.3% | -0.1% | -1.0%
39 | 23/Dec | Banco Comercial Português, S.A. informs about the registry of the new share capital and about the new company secretary (effective and alternate) | -1,0% | -0,6% | -1,0% | -0,3% | 0,6% | 0,0%
41 | 29/Dec | Banco Comercial Português, S.A. informs about Restructuring Funds | -1,5% | -0,2% | -0,6% | 15,2% | 13,8% | 8,7%

The following chart depicts BCP's share price performance in 2022:

| 2022 REPORT & ACCOUNTS

30 |
Dividend policy
The BCP Group's dividend policy takes into account in particular: (i) the promotion of conditions for sustainable
compliance with the capital ratios applicable to the Bank at any given time, as well as other applicable legal
provisions, including the limitations applicable at any given time that result from the calculation of the maximum
distributable amount; (ii) retention of own funds to promote consistency with the Risk Appetite Statement (RAS) and
with the results of the internal capital adequacy self-assessment process (ICAAP); and (iii) safeguarding an
appropriate safety margin over the values established by the regulator within the scope of its analysis and assessment
regarding the adequacy of strategies, processes, capital and liquidity, to the risks to which the Bank is exposed
(SREP). In the current context, it will naturally still be worth considering the guidance issued by the ECB mentioned
above.
The decision on the application of profits for the year is the responsibility of the General Meeting, based on a
proposal from the Board of Directors.
Bearing in mind the permanent consideration of the Bank's capital needs to meet its strategic objectives, it is the
intention of the Board of Directors, in a context of macroeconomic stability, to re-establish a distribution of net
profits, determined in the individual accounts for each year, that goes to meeting the legitimate expectations of its
shareholders and that, in the medium term, it is in line with the best practices of the reference banking sector.
The Board of Directors will define the implications of these criteria in the maximum limit of prospective dividend
payout resulting from the dividend policy, as well as the respective application period, which must be evidenced in
the Bank's annual budgets.
Shareholder structure
According to information from Interbolsa, on December 31, 2022, the number of Shareholders of Banco Comercial
Português amounted to 137,834.
At the end of December 2022, there were two Shareholders with qualifying holdings holding more than 5% of the
Bank's share capital.

Shareholder structure | Number of Shareholders | % of share capital
INDIVIDUAL SHAREHOLDERS |  |
Group Employees | 2,578 | 0.34%
Other | 130,962 | 25.74%
COMPANIES |  |
Institutional | 329 | 18.67%
Qualified Shareholders | 2 | 49.44%
Other companies | 3,963 | 5.81%
TOTAL | 137,834 | 100%

Shareholders with more than 5 million shares represented 73.1% of the share capital.

Number of shares per Shareholder | Number of Shareholders | % of share capital
> 5,000,000 | 116 | 73.10%
500,000 a 4,999,999 | 1,476 | 10.72%
50,000 a 499,999 | 12,829 | 11.54%
5,000 a 49,999 | 35,333 | 4.12%
< 5,000 | 88,080 | 0.52%
TOTAL | 137,834 | 100%

2022 REPORT & ACCOUNTS |

|31
The Bank’s shareholding structure remained stable in terms of geographical distribution in 2022. Domestic
shareholders held 31.2% of the total shares of the Bank as of December 31, 2022.

| Nr. of Shares (%)
Portugal | 31.2%
China | 29.9%
Africa | 19.7%
UK / EUA | 7.2%
Other | 12.0%
Total | 100%

| 2022 REPORT & ACCOUNTS

32 |
Qualified Holdings

The following Shareholders held more than 2% of the share capital of Banco Comercial Português, S.A. as of
December 31, 2022:

31 December 2022
Shareholder |  | Nr. of shares | % of share capital | % of voting rights
Chiado (Luxembourg) S.a.r.l., an affiliate of Fosun, whose parent company is Fosun International Holdings Ltd |  | 4,525,940,191 | 29.95% | 29.95%
TOTAL FOR FOSUN GROUP |  | 4,525,940,191 | 29.95% | 29.95%
Sonangol - Sociedade Nacional de Combustíveis de Angola, EP, directly |  | 2,946,353,914 | 19.49% | 19.49%
TOTAL FOR SONANGOL GROUP |  | 2,946,353,914 | 19.49% | 19.49%
Total of Qualified Shareholdings |  | 7,472,294,105 | 49.44% | 49.44%

2022 REPORT & ACCOUNTS |

|33
i
Regulatory, economic and
financial system environment

Regulatory environment
Despite a more favourable materialization of risks
than initially anticipated, the Russia-Ukraine
conflict remained a very relevant factor for the
regulatory and supervisory context, both in
monitoring and in establishing the restrictions/
sanctions adopted by the European Union, both
the macroeconomic and financial level and the
resulting sectoral cyclical impacts, namely with
the debt-reduction effort.
Climate change and cybersecurity remain
priorities for regulators and supervisors,
supporting follow-up and preparation exercises
for defining new regulatory acts. In the climate
action plan, the ECB adopted measures to
incorporate climate change into its monetary
policy operations, the integration of
environmental, social and governance risks
(“ESG”) in the supervisory framework was
supported by the exercise of climate stress test of
the economies in the EU, which took place in
2022, and the regulations for corporate
sustainability reporting were published. In the
context of cybersecurity, the regulation on the
Digital Operational Resilience of the financial
sector (“DORA”) and the new directive on
measures to ensure a high common level of
network and information security throughout the
Union were published (“NIS2”). While the
complexity of the matter regarding artificial
intelligence still does not reach the consensus of
the relevant entities for a close finalization of the
regulation, the Council and the European
Parliament reached a provisional agreement on
the extension to crypto assets of the
requirements applicable to the transfer of funds.
The compromise text on the implementation of
the Basel III reforms in the banking legislation of
the European Union was approved by the Council
of the European Union. Money laundering and
terrorist financing risk factors are among the
elements to be considered included in supervisory
practices and internal governance models, with
the European Council having already issued its
position on the proposal to create the European
anti-money laundering authority (AMLA) and the
EBA issued guidelines to consider when accepting
customers through remote channels.
In Portugal, the Bank of Portugal issued Notice
1/2022 on the prevention of money laundering
and terrorist financing, which came into force on
5 August 2022. Also, Resolution of the Council of
Ministers no. 69/2022 , of August 9, approves the
National Strategy for the Prevention and Combat
of Money Laundering, the Financing of Terrorism
and the Financing of the Proliferation of Weapons
of Mass Destruction.
Some of the exceptional capital and liquidity
relief measures allowed by the ECB following the
COVID-19 pandemic, namely the ability to
temporarily operate below the level of own funds
defined for Pillar 2 guidance (“P2G”) and
smoothing of valuation impacts of public debt
portfolios ended at the end of 2022.
In Portugal, the law no. 23-A/2022, which
transposes Directives (EU) 2019/878 (CRD V) and
2019/879 (BRRD II), relating to access to banking
activity and prudential supervision and to the
recovery and resolution of credit institutions and
investment firms was approved. Measures were
also adopted by the national authorities within
the scope of their competence, namely macro-
prudential, behavioural and financial markets, in
line with the local reality and, when applicable,
in accordance with the guidelines issued by the
European authorities, namely:
•Decree-Law No. 80-A/2022, of 25 November,
which establishes measures aimed at mitigating
the effects of the increase in the reference
indexes of credit agreements for the acquisition
or construction of permanent own housing;
•Decree-Law No. 31/2022, of 6 May, which
establishes the legal framework for covered
bonds, transposing Directive (EU) 2019/2162 on
the issuance of covered bonds and the public
supervision of these bonds, harmonizing the
requirements of the issuance and supervision of
covered bonds within the European Union
resulting from Directive (EU) 2021/2261;
•Instruction 11/2022 and Instruction 12/2022, of
the Bank of Portugal, concerning the
implementation of the Eurosystem's monetary
policy – additional temporary measures;
•At the macroprudential level, the
countercyclical capital buffer applicable to
credit exposures to the domestic non-financial
private sector remained at 0% of the total
amount of exposures.
In June 2022, the European Council approved the
implementation of Poland's recovery and
resilience plan, aimed at mitigating the effects of

| 2022 REPORT & ACCOUNTS

34 |
the pandemic crisis. The total allocation under
the Recovery and Resilience Facility is EUR 35.4
billion. The disbursement is conditional on
reaching the goals and interim objectives
established for investments and reforms in the
recovery and resilience plan.
The Polish government extended measures to
mitigate the effects of high inflation, namely
through the reduction of some taxes, and the
program to support families with housing loans in
local currency was approved to mitigate the
impact of the increase in the inflation rate and of
the interest rates, with an impact on banks'
profitability. Additionally, an assistance fund,
financed by the financial system, is in progress,
and the introduction of a new indexing interest
rate that will replace the WIBOR, with
foreseeable effects from 1 January 2025, with the
replacement terms for the contracts currently
indexed to Wibor.
The General-Advocate of the Court of Justice of
the EU, in his opinion in case C-520/21 on the
consequences of cancelling a mortgage loan
contract, released on 16 of February 2023, points
out that the directive does not provide for the
consequences of declaring the non-existence of a
contract concluded with a consumer after the
removal of unfair terms contained therein. Those
consequences are determined by Member States
through national law. The General Advocate also
considers that the directive does not preclude
consumers from submitting claims that go beyond
the reimbursement of instalments paid under the
invalid mortgage loan agreement and default
interest at the legal rate, having the opposite
opinion as to the possibility of the bank to make
claims of a similar nature, however, it is up to the
national courts to ascertain the merits of such
claims.
The Government of Mozambique reached an
agreement with the IMF to resume financing the
economy. Within the scope of the implementation
of the reform program, it is planned - with a view
to improve the stability of the financial system -
to strengthen actions in the context of combating
money laundering in accordance with the
commitment associated with the incorporation of
Mozambique in October 2022 in the closer
monitoring procedures ("grey list”) by the FATF,
as exemplified by the publication in November of
Notice no. 5 by Banco de Moçambique, and the
improvement of financial inclusion indicators.
Likewise, as a mechanism for mitigating cyber
risk, Banco de Moçambique outlined a set of
actions at the level of regulatory and supervisory
legislation. Within the scope of monetary policy,
emphasis should be given to the decision, in early
2023, to sharply increase (ca. 2.5 times) the
Required Reserve coefficients for liabilities in
national and foreign currency, with the aim of
reinforcing the restrictive nature of monetary
policy to combat inflationary pressures. There
were no changes in the scope of macroprudential
measures.
Economic environment
Global Economic Environment
In 2022, the global GDP recorded a marked slowed
down, as a result of the economic fallout of
Russia’s military aggression against Ukraine,
namely through the increase of energy and food
prices.
In 2023, the International Monetary Fund (IMF)
predicts that the global economy will maintain its
deceleration trajectory, with a growth rate of
2.9%, below its historical average (3.8%). The risks
to this projection are tilted to the downside,
stemming from a deteriorating geopolitical
situation and the evolution of the monetary
policy.
Global Financial Markets
In financial markets, 2022 was characterised by
the predominance of high volatility. In equity
markets, the high degree of uncertainty and the
inversion of the expansionary monetary policy
stance determined marked devaluations of major
global indices. In sovereign debt markets, there
was a sharp rise in governmental bond yields,
amid expectations of a higher general level of
interest rates given by the increasing inflationary
pressures. The challenging macroeconomic and
financial environment penalised the risk premia of
both corporate bonds and Euro Area periphery
sovereign debt, as well as emerging market’s
asset classes. In the foreign exchange market,
there was a strong appreciation of the US Dollar,
particularly against the Euro and the Japanese
Yen. Despite the turmoil that characterised
financial markets in 2022, the national equity
index gained 2.8.
The European Central Bank has raised its
reference interest rate, from 0.0% to 2.50%,
driven by soaring inflation rates in the euro area,

2022 REPORT & ACCOUNTS |

|35
which registered an annual increase of 8.4% in
2022. Against this backdrop, inter-bank interest
rates Euribor recorded notable increases,
reaching levels not seen since 2008.
Outlook for the Portuguese Economy
In 2022 the GDP grew 6.7%, which represented an
acceleration compared to the growth of 5.5%
observed in the preceding year. The dynamism of
private consumption and of tourism exports was
crucial to boost economic activity and mitigate
the impact of the slowdown in investment.
In 2023, the Bank of Portugal predicts a
significant deceleration of the Portuguese
economy, hindered by the uncertainty regarding
external demand and the evolution of the
inflation rate, that is expected to rise 5.8%, after
reaching 8.1% in 2022.
The strong nominal growth of the Portuguese
economy contributed to a reduction of the
Portuguese public debt as a percentage of GDP,
from 125.4% to 113.8% of GDP in 2022. Regarding
external debt, it is worth noting that the current
account registered in 2022 the highest deficit
since 2011, penalised by the steep rise in
imported commodity prices.
International Operations
In 2022, the Polish economy remained resilient
notwithstanding the heightened uncertainty
stemming from Russia’s military aggression
against Ukraine, rising financing costs, risks of
disruption in energy supply, and soaring inflation
rates, which registered an annual increase of
13.2%. In order to tame the high inflationary
pressures, the central bank hiked its key interest
rate from 1.75% to 6.75%. The Zloty depreciated
marginally compared with 2021 year-end values,
despite the volatility observed throughout the
year, especially in the first quarter.
Resulting from the persistently high inflation
levels, as well as geopolitical risks, the IMF
envisages a marked decrease of Poland’s GDP
growth rate in 2023 (from 5.2% to 0.3%).
In Mozambique, economic activity accelerated in
2022, from 2.3% to 4.2%, bolstered by the
favourable evolution of the extractive industry. In
2023, the IMF expects that the GDP continues its
recovery, despite the slowdown in global
economy. In 2022, the inflation rate registered an
annual increase of 9.3%, driven by the sharp rise
in energy and food prices. Against this
background, the central bank rose its key interest
rate from 13.25% to 17.25% over the year and the
Metical appreciated.
In 2022, Angola’s economy sustained its recovery
trend, benefiting from the rise in oil prices, which
backed the evolution of the Kwanza. In 2023, IMF
foresees an acceleration of GDP, from 2.8% to
3.5%.

| 2022 REPORT & ACCOUNTS

36 |

GROSS DOMESTIC PRODUCT |  |  |  |  |
Annual growth rate (in %) |  |  |  |  |  |
|  |  | 2020 | 2021 | 2022 | 2023 | 2024
EUROPEAN UNION |  | -5.6 | 5.5 | 3.5 | 0.7 | 1.8
Portugal |  |  | -8.3 | 5.5 | 6.7 | 0.7 | 2.4
Poland |  |  | -2.0 | 6.7 | 5.2 | 0.3 | 2.4
SUB-SAHARAN AFRICA |  | -1.6 | 4.7 | 3.8 | 3.8 | 4.1
Angola |  |  | -5.8 | 0.8 | 2.8 | 3.5 | 3.9
Mozambique |  |  | -1.2 | 2.3 | 4.2 | 4.9 | 8.2
Source: National Statistics Institutes. IMF, January 2023 for the EU, Poland and Sub-saharan Africa. IMF, October 2022 for Portugal and Mozambique. IMF, February 2023 for Angola (Article IV).
| Estimates |  |  |  |  |  |

2022 REPORT & ACCOUNTS |

|37
Financial system
2022 was strongly affected by the invasion of
Ukraine by Russia and ensuing impacts on the world
economy, with Western countries and their allies
imposing unprecedented sanctions on Russia. The
full impact on the economy is still uncertain, with
multi-lateral agencies revising downwards their
world economic growth forecasts for 2022-23. The
Russia-Ukraine conflict caused turmoil in financial
markets, contributed materially to raise
inflationary pressures and significantly increased
uncertainty about the pace of global economic
recovery, also increasing general concern about
food shortages in the short/medium term and a
widespread decrease in purchasing power. It should
be noted that the Covid-19 pandemic was still
present in the economy, with new waves continuing
to cause delays and disruptions in supply chains, in
the labour market, as well as changing consumption
patterns, preventing a homogeneous recovery of
the economic activity across sectors and countries.
Also noteworthy is the return of measures to
control the pandemic, namely in Asia (e.g. China),
the shortage of some intermediate goods and the
rise in the prices of raw materials/commodities,
namely energy.
In the first quarter of 2022, the process of
normalization of monetary policy began in the Euro-
Zone, with the ECB announcing the end of net
purchases under the PEPP (‘Pandemic Emergency
Purchase Programme’), though maintaining an
accommodating policy stance and supporting
favourable financing conditions in the current high
inflation context. In June, ECB announced the end
of net purchases in the asset purchase programs
(“APP”) and started raising interest rates in the
third quarter, with calibration dependent on the
evolution of inflation in the mid-term. It also
announced the creation of an “anti-fragmentation”
mechanism to prevent a potential new Eurozone
debt crisis, taking into account the vulnerabilities
that still persist, resulting from the pandemic.
Geopolitical issues (e.g. Russian invasion of
Ukraine, US-China tensions, Middle East,
globalisation) and possible new pandemic
developments (e.g. new variants) may continue to
impact the pace of economic recovery and the
normalization of monetary policy.
In a very uncertain economic context, the
Portuguese banking system maintained positive
levels of profitability, although still below its cost
of capital. The evolution and performance of the
banking system continued to be impacted by
increasingly demanding and costly supervision and
regulation, including the intensification of ad-hoc
reporting, and regulatory contributions that
continue to increase (e.g. contributions to the
European and National Resolution Funds, and
Contributions to the Banking Sector, in these last
two cases at a clear disadvantage compared to
other European jurisdictions). In the current
context of high uncertainty, the Portuguese banking
system continues to show strength both in terms of
capital and liquidity, and improved asset quality
indicators, reflecting the efforts made in recent
years to reduce NPE and to reinforce provisioning
and coverage levels.
The performance and evolution of the Portuguese
banking system was impacted, inter alia, by the
level of implementation the ‘Plano de Recuperação
e Resiliência (PRR)’, created to mitigate the
negative economic impacts of the pandemic and
now also the impacts of the invasion of Ukraine by
Russia, and also by the evolution of disposable
income and of consumption behaviour and savings
profile of Households, on the back of rising inflation
and interest rates, even when mitigated by income
support from social security and from employers
and by resilient employment levels.
The last few years have seen Banks in Portugal
adjust their business and customer relationship
models, making them more digital, proximate,
simple, safe and sustainable, improving the overall
quality of service provided to increasingly
demanding Customers. But the absence of a single
regulatory framework applying to all entities that
can operate in specific business segments, which
would ensure a level playing field, will continue to
force the banking system to maintain its focus on
optimised efficiency levels in order to mitigate the
impact of the loss of business and revenues to
unregulated non-bank players and to continue
adapting their business models to the new
environment. Compliance, cybersecurity and other
risks have required enhanced investment in
appropriate operating and technological risk
assessment and control policies, as well as in IT,
and particularly data security systems and in risk
control frameworks, together with the adaptation
and the integration of ESG requirements
(Environmental, Social & Governance) in daily
management, so as to attain a more resilient
response of the financial system to the current and
future economic context.

| 2022 REPORT & ACCOUNTS

38 |
Business Model

Nature of operations and main
activities
The Group provides a wide variety of banking
services and financial activities in Portugal and
abroad, where it is present in the following
markets: Poland, Mozambique, Angola (through its
associate BMA) and China (Macao). All its banking
operations develop their activity under the
Millennium brand. The Group also ensures its
international presence through representation
offices and/or commercial protocols.
The Bank offers a vast range of financial products
and services: current accounts, payment systems,
savings and investment products, private banking,
asset management and investment banking,
including mortgage loans, personal loans,
commercial banking, leasing, factoring and
insurance, among others. The back-office
operations for the distribution network are
integrated to benefit from economies of scale.
In Portugal, Millennium bcp is focused on the
retail and companies markets, providing services
to its Customers in a segmented manner. The
Bank makes products available to Customers
through its network of branches, offering a wide
range of products and services.
Distinctive factors of the business
model
Largest private sector banking
institution
BCP is the largest private banking institution in
terms of business volume in Portugal, assuming a
leading and prominent position in various
financial products and services as well as
different market segments, with its activity based
on a modern branch network with wide coverage
at a national level. In addition, the Bank has
remote banking channels (banking service by
telephone, Mobile Banking and Internet), which
act as distribution points for its financial products
and services.
The activity in the domestic market focuses on
Retail Banking and Companies, which is
segmented in order to best serve Customer needs,
through a value proposition based on innovation
and speed, targeting Mass-market Customers, and
through the innovation and customized
management of service for Prestige, Business,
Companies, Corporate and Large Corporate
Customers. Retail Banking is also developed
through ActivoBank, a bank aimed specifically at
Customers who are young in spirit, intensive users
of new technologies and prefer a banking
relationship based on simplicity and offering
innovative products and services.
At the end of December 2022, Millennium bcp
continued to be the largest Portuguese privately-
owned bank on business volumes and with a
relevant position in the countries where it
operates.
On 31 December 2022, operations in Portugal
accounted for 70% of total assets, 70% of total
loans to Customers (gross) and 74% of total
customer funds. The Bank had over 2.7 million
active Customers and market shares of 17.3% and
19.1% of loans to Customers and customer
deposits, respectively.
International presence as a platform
for growth
At the end of December 2022, Millennium bcp was
also present throughout the world through its
banking operations, representative offices and/or
commercial protocols, serving over 6.5 million
active Customers.
In Poland, Bank Millennium has a well distributed
network of branches, supported by a modern
multi-channel infrastructure, a service quality and
with high brand recognition.
In December 2022, Bank Millennium had a market
share of 5.9% in loans to Customers and of 5.6% in
deposits.
Bank Millennium S.A. Capital Group, in Q4 2022,
reported net profit of PLN 249 million (EUR 53
million), despite high costs related to FX-
mortgages (4Q22: PLN 617 million after tax, EUR
132 million). It is worth mentioning the return to
profits after a long period of quarterly negative
results.
In spite of the positive earnings in Q4 2022, in the
full year 2022 (‘FY22’), reported net result was
negative (PLN 1,015 million, EUR 217 million) but
was lower than the PLN 1,332 million (EUR 292
million) losses reported in 2021 (‘FY21’). In FY22,
FX-mortgage costs were lower than those in FY21,
PLN 2,363 million (EUR 505 million) versus PLN
2,430 million (EUR 533 million), both after taxes.
Bank Millennium results were strongly impacted
by the cost of credit holidays (PLN 1,073 million

2022 REPORT & ACCOUNTS |

|39
after tax, EUR 229 million) and significant cost of
IPS (PLN 224 million after tax, EUR 48 million).
In 4Q22, capital ratios improved markedly,
returning to levels above the minimum
requirements. TCR increased to 14.4% at YE22,
while T1 ratio to 11.3%. This was an outcome of
lower RWAs, Q4 2022 net income and fair value
impact of the securities portfolio.
Concerning the operations in Africa, Millennium
bcp operates through Millennium bim, a universal
bank that has been operating since 1995 in
Mozambique, where it has about 1.2 million
Active Customers and is the reference bank in this
country, with market shares of 15.2% in loans and
advances to Customers and of 24.2% in deposits,
in the end of 2022. Millennium bim is a highly
reputed brand in the Mozambican market,
associated with innovation, strong penetration in
terms of electronic banking and exceptional
capacity to attract new Customers, as well as
being a reference in terms of profitability.
On 22 April 2016, the deed of the merger of
Banco Millennium Angola, S.A. with Banco Privado
Atlântico, S.A. was signed. The bank resulting
from the merger is an associate of Banco
Comercial Português.
The Group also operates in the Far East since
1993. The activity of the existing branch in Macau
was expanded in 2010, through the attribution of
a full license (onshore) aimed at establishing an
international platform for business operations
between Europe, China and Portuguese-speaking
African countries.
The Bank also has 6 representation offices (1 in
the United Kingdom, 2 in Switzerland, 2 in Brazil
and 1 in China, in Guangzhou), 3 commercial
protocols (USA, France and Luxembourg).
Growth based on digital/mobile
banking
Since its incorporation, the Bank has been
recognized by the innovation. The Bank was the
first in Portugal to introduce specific innovative
concepts and products, including direct marketing
methods, branch formats based on Customer
profiles, salary accounts, simplified branches
("NovaRede"), telephone banking services,
through Banco 7, which later became the first
online banking services platform, health insurance
(Médis) and direct insurance, and a website
dedicated to individual Customers and corporate
banking. The Bank was also a pioneer in the
launching of a new Internet Banking concept,
based on the ActivoBank platform, which provides
a simplified service to the Customer, including
the opening of a current account using Mobile
Banking solutions.
Digital banking
In 2022, sales made through digital channels
represented 78% of the Bank's total sales, in
number of operations and considering the
products available in both channels, an increase
of 7p.p. compared to 2021. The Bank continued
the plan to develop a digital experience focused
on mobile, with the application of an increasingly
personalized and targeted communication
strategy with Customers, highlighting the greater
convenience of the products and services made
available on the Millennium App and the seek to
simplify the Customer's day-to-day life.
In personal loans, production levels through the
digital channel were 78% higher than those seen
in 2021, with the App being responsible for 88% of
digital transactions (+5p.p compared to 2021).
New functionalities were also developed in
mortgage loans, such as the request for credit in
the App or on the website, signing of the approval
letter and the respective follow-up by the
Customer of the entire process, thus making it a
more complete journey, with a process faster and
transparent for the Customer. The online tracking
functionality is highly valued and already has a
70% adherence by Customers.
The sale of credit cards on the App accounted for
83% of digital card sales in 2022.
In terms of investments, the significant weight of
digital was maintained in most products sold in
these channels in 2022: 52% of subscriptions to
Investment Funds, 93% of subscriptions to
Millennium bcp Certificates and 97% of Stock
Exchange Orders. It should be noted that the
Millennium App represented 42% of the sale of
Investment Funds on digital. A new personalized
investment hub was also launched in 2022, which
allows Customers to consult balances and returns
on their investments.

| 2022 REPORT & ACCOUNTS

40 |
Customer-oriented relationship model
Millennium bcp's Communication in 2022 was
marked by intense activity, not only advertising,
but also relational, through face-to-face
proximity events.
Alongside the return to television, through a
mortgage loan campaign with a strong impact,
there was a consolidation of the dissemination of
messages about the Bank's strategic products and
solutions, with a clear focus on Mobile and
Digital.
In this context, special mention should be made
of the launch of campaigns for split payments on
the credit cards payments, and the iziBizi
solution, which allowed the Bank to consolidate
its position of innovation in the market.
it is also important to highlight the strategic
orientation for the segment of young university
students. In the last quarter of the year, the UNNI
campaign was launched, aimed at university
students across the country, marking a new way
of communicating with this segment, in pursuit of
attracting Customers from younger age groups
and building long-term relationships.
The Companies segment continued to be a strong
lever in the relational strategy, with a new
edition of the Millennium Talks, which
significantly marked the year 2022, through
aggregating events for sharing the experiences of
leading figures in the Portuguese business sector
with the presence of Customers, Employees and
institutional representatives.
In terms of advertising, the Companies area
continued to show dynamism, with the launch of
strategic business campaigns - of which we
highlight Exports, Factoring and Confirming and
the M2030 Platform - as well as communication
actions to reinforce of leadership positioning –
with topics such as PME Líder, PME Excelência or
COTEC Inovadora.
In terms of Sponsorships, 2022 was marked by the
return of the “Millennium Estoril Open” and the
Millennium brand's communication focus on Surf.
Millennium became the Official Bank of the World
Surf League competitions in Portugal, sponsoring
the national surfing champion and WSL European
champion, Teresa Bonvalot, as well as Marta
Paço, current adapted surfing world champion.
In Culture, the Bank continues to stand out for its
distinctive presence, with the Sponsorship of the
"Millennium Festival ao Largo" and the
dissemination of initiatives in close collaboration
with the Millennium Foundation.
The Millennium brand continued to achieve
significant levels of awareness, as a result of the
ongoing effort to provide close, relevant and
energizing communication with Customers and
consumers.
The result of this commitment could not be
better, with consumers choosing Millennium bcp
as the reference institution in the national
banking system, with the attribution of the
“Consumer Choice Award” for the 3rd consecutive
year and the “Five Star Award” in the Category
“Large Banks”, in a statement full of complicity,
proximity and trust.
Business Model Sustainability
Millennium bcp, with the objective of
strengthening its proposal and performance in
matters of Sustainability and responsible finance,
has been leading a fast-paced transforming
dynamic of adaptation to new ESG
(Environmental, Social and Governance)
requirement allowing it to respond to the
expectations of Stakeholders in these lines of
action.
For this evolution the Bank has, within the
framework of its governance and decision-making
model, a Committee of the Board of Directors for
Corporate Governance, Ethics and Sustainability,
a Sustainability Committee headed by the CEO
and a Sustainability Director Plan, a management
instrument that should be understood as a
coherent aggregator of multidisciplinary actions
to be developed within the scope of ESG
dimensions.
Millennium bcp's intervention is thus divided into
three fundamental axes: Environmental, aimed at
implementing measures that encourage a fair and
inclusive transition to a decarbonised economic
development model, including the incorporation
of the climate dimension in the Bank's risk models
and in the offer commercial products and
services; Social, which ensures and promotes, in
articulation with the Millennium bcp Foundation,
proximity and involvement with internal and
external communities in the creation of shared
value; and Corporate Governance, promoting the
integration of Sustainability principles in the
Bank's decision-making and management
processes.
This alignment is central to Sustainability at
Millennium bcp, remaining as a privileged means
of determining the social and environmental
impact of the activity carried out and the
expected corporate performance of the company
in these dimensions. The Bank is aware of the
competitive advantage of incorporating
environmental, social and governance factors,
opportunities and risks in decision-making
processes and of reflecting them in the provision
of solutions, products and services, a conviction
that is well expressed in the inclusion of

2022 REPORT & ACCOUNTS |

|41
Sustainability as one of the vectors structuring
elements of the "Superação 24" Strategic Plan, a
document that summarizes the vision, objectives
and value proposition of Millennium bcp for the
three-year period 2021-2024.
The deepening of a Responsible Business culture
that promotes the creation of wealth and its fair
distribution, and positively influences the
organization's long-term value proposition, in
balance with the well-being of people, the
company and the communities in which is inserted
and with respect for the preservation of natural
resources, the climate and the environment,
constitute the essence of the Sustainability
strategy, policies and practices defined and
implemented by the BCP Group in all its
geographies in which operates.

| 2022 REPORT & ACCOUNTS

42 |
Millennium network

2022 REPORT & ACCOUNTS |

|43
Financial information

| 2022 REPORT & ACCOUNTS

44 |
Results and Balance Sheet

The consolidated Financial Statements were prepared under the terms of Regulation (EC) 1606/2002, of 19
July (in the version in force), and in accordance with the reporting model determined by the Bank of
Portugal (Bank of Portugal Notice 5/2005, in the version in force), following the transposition into
Portuguese law of Directive 2003/51/EC, of 18 June, of the European Parliament and Council in the version
currently in force.
To provide a better reading of the evolution of the Group’s financial situation and to ensure comparability
with the information from previous periods, a set of concepts are described in this analysis that reflect the
management criteria adopted by the Group in the preparation of the financial information, whose
accounting correspondence is presented in the glossary and throughout the document, whenever
applicable.
Following the sale, in 2021, of the entire share capital of Banque Privée BCP (Suisse) S.A. ("Banque Privée"),
and the disposal by Banco Internacional de Moçambique, SA (a bank incorporated under Mozambican law in
which BCP indirectly holds, a 66.69% interest (“BIM”) to Fidelidade – Companhia de Seguros, SA
(“Fidelidade”) of shares representing 70% of the share capital and voting rights of Seguradora Internacional
de Moçambique, SA (“SIM ”), currently known as Fidelidade Moçambique, SA, and in accordance with the
provisions of IFRS 5, the contribution from the Swiss subsidiary and from SIM for the consolidated earnings
of the Group is reflected in the income arising from discontinued operations in the international activity
and the historical information has been restated since January 2020, to ensure comparability. The
disclosure of the assets and liabilities of Banque Privée and SIM in historical periods has not been changed in
view of the criteria considered in previously published financial statements. In this context, and taking into
account the immateriality of the respective balance sheet balances in the Group's overall calculation, the
calculation of the various indicators presented and which relate the performance of the operating account
to the balance sheet aggregates were not adjusted, with the exception of the net interest margin, the
calculation of which reflects the fact that the assets of the referred subsidiaries are no longer considered
interest earning assets in the current period and in the historical information presented for the years 2020
and 2021.
As described in note 48 of the Notes to the Consolidated Accounts, after the signature by the President of
the Republic of Poland and the announcement in the Journal of Laws of the Republic of Poland on the same
day of the Act of 7 July 2022 on crowdfunding for business ventures and assistance to borrowers ('the Act''),
introducing, among others, the possibility of suspending eight instalments in 2022-2023 (credit holidays) for
borrowers of mortgage loans denominated in Zlotys, the Bank Millennium Group recognized an
extraordinary cost in the third quarter in the amount of 1,423 million Zlotys (306 million euros). The
adjustment value was originally calculated as the difference between the gross value of the loan portfolio
on the calculation date and the current value of estimated cash flows in loan agreements, considering that
80% of eligible borrowers will suspend loan instalments. As a result of the analysis of customer behaviour
carried out in December 2022, the Bank Millennium Group adjusted the participation percentage estimate
to 68%. As a result of the above and the costs currently expected, the amount of the adjustment recognised
in 2022 was reduced to 1,324 million Zlotys (283 million euros). In the fourth quarter of 2022, the Bank
reclassified the aforementioned amount, which was accounted for in other impairments and provisions,
starting to recognise these costs as results on modification. This item also started to include contractual
modifications, in accordance with IFRS 9, namely those negotiated with customers holding foreign exchange
mortgage loans. The amounts referring to 2021 and 2020, given their immateriality in this context, were not
restated.
In 2022, with the exception of the restatement and reclassifications made with the purpose of ensuring the
comparability of information, exclusively resulting from the situations previously mentioned, no other
changes were introduced in the way information regarding previous financial years was presented.
In 2022, the Group liquidated its subsidiaries BCP Finance Company and Millennium bcp Bank & Trust.
In 2022, Banco Comercial Português, S.A. ('BCP') completed Project Crow regarding the sale of Participation
Units in Fundo de Recuperação Turismo, Fundo de Capital de Risco and FLIT-PTREL-SIF, S.C.A., as well as
other assets of the hospitality sector. Considering that the Bank had already booked provisions for the
potential impacts arising from the reduction of exposure to these assets, the completion of this transaction
did not have a material impact on the consolidated results.

2022 REPORT & ACCOUNTS |

|45
The consolidated net income of Millennium bcp amounted to 207 million euros in 2022, standing
significantly above the 138 million euros achieved in the previous year, in spite of the extraordinary effects
related with the Bank Millennium and ROE stood at 4.0%.
The key effects 1 of Bank Millennium were: 526 million euros of costs related with the foreign exchange
mortgage loan portfolio, cost related with credit holidays of 283 million euros, contribution of 59 million
euros for the Institutional Protection Scheme (IPS) and booking of Bank Millennium goodwill impairment of
102 million euros.
Despite the previously mentioned impacts, the favourable performance of net income of the Group was
possible mainly thanks to the evolution of core income, which proved to be 26.1% higher than the 2,316
million euros recorded in 2021, reaching 2,922 million euros at the end of 2022.
At the same time, the performance of the results of the Group also benefited from the reduction recorded
in operating costs, despite the rise in inflation observed in the geographies in which the Bank operates,
since the previous year had been penalised by the extraordinary provision recognised as staff costs in the
activity in Portugal, to address the costs of the headcount adjustment plan carried out by the Bank that
year.
2022 was characterised by a reduction in Millennium bcp’s consolidated balance sheet, observed in the
activity in Portugal, which is mainly due to the early repayment of the bulk of the financing that had been
obtained from the European Central Bank within the scope of targeted longer-term refinancing operations
(TLTRO). Millennium bcp’s consolidated balance sheet total assets amounted to 89,861 million euros as of
31 December 2022, showing a 3.3% drop in comparison with the 92,905 million euros accounted by the end
of 2021, highlighting, on the one hand, the reduction in cash and deposits at Central Banks, in loans to
customers and in securities portfolio and, on the other hand, the increase in loans and advances to credit
institutions.
Total liabilities of the Group stood at 83,940 million euros at the end of 2022, showing a decrease of 2.2%
compared to the 85,843 million euros recorded at the end of 2021, being worth mentioning, on the one
hand, the reduction in resources from Central Banks and non-subordinated debt securities issued and, on
the other hand, the increase in customer resources and others liabilities.
Consolidated loans to customers (gross) of Millennium bcp amounted to 57,713 million euros as of 31
December 2022, standing below the 58,231 million euros figure achieved at the end of the previous year,
mainly due to the reduction recorded in the international activity, despite the fact that the increase in the
activity in Portugal partially offset that reduction.
Total customer funds amounted to 92,808 million euros as of 31 December 2022, showing a favourable
evolution, increasing 3.0% compared to the 90,097 million euros posted at the end of 2021. While there was
an expansion of balance sheet customer funds, a decrease was observed in off-balance sheet customer
funds. Deposits and other resources from customers of the Group showed an increase of 9.1% against the
69,560 million euros recorded on 31 December 2021, totalling 75,907 million euros at the end of 2022, with
this increase being driven by activity in Portugal, although international activity also contributed to that
performance, but to a lesser extent.

| 2022 REPORT & ACCOUNTS

46 |
1 Net of tax and before minority interests.
PROFITABILITY ANALYSIS
NET INCOME
The consolidated net income of Millennium bcp
amounted to 207 million euros in 2022, standing
significantly above the 138 million euros achieved
in the previous year.
This evolution of net income of the Group was due
to the significant growth recorded in the activity
in Portugal, although its impact was largely offset
by the evolution of the result of the international
activity, arising from the negative result
associated with the Polish subsidiary.
NET INCOME
Million euros
In this sense, it should be noted that despite the
good operating performance of Bank Millennium
S.A., the uncertainty associated with the material
impacts arising from new legislative measures, led
the Bank to consider the total impairment of the
current goodwill associated with the acquisition
by the BCP Group of the percentage of control
over Bank Millennium S.A. in the amount of 102 2
million euros as at 30 June 2022.
Though still negative, the net result of the Polish
subsidiary evolved favourably compared to last
year, despite the worsening of the extraordinary
effects that have strongly influenced its
performance, having returned to positive results
in the fourth quarter of 2022, after an extended
number of quarters with negative results.
In this context, the Bank recognised upfront the
potential costs arising from the program of
moratoriums (credit holidays) enacted in July
2022 by the President of the Republic of Poland.
Thus, following the signing by the President of the
Republic of Poland of the Act of 7 July 2022 on
crowdfunding for business ventures and assistance
to borrowers (‘the Act’), introducing, among
others, a possibility of up to 8 months of credit
holidays in 2022-2023 for borrowers of mortgages
denominated in Zlotys, the Bank estimated the
maximum impact of the implementation of this
Act if all eligible Bank Millennium Group’s
borrowers were to use this instrument, having
recognised an upfront cost of 80% of such
maximum impact in the results of the third
quarter of 2022, corresponding to 305 2 million
euros. In the fourth quarter of 2022, a review was
carried out of the effective cost and use of credit
moratoriums by eligible borrowers in the second
half of 2022, and ongoing requests to suspend loan
instalments in 2023 were analysed. As a result of
this review, the total estimated cost of credit
moratoriums was reduced to 283 2 million euros at
the end of 2022, with a positive impact on the
results for the fourth quarter of the year. These
costs are recognised under the heading results on
modification, justifying almost the entirety of its
balance in 2022.
On the other hand, the results of the operation in
Poland continue to be penalised by the costs
incurred with the mandatory contributions to
which it was subject. In this context, it is worth
highlighting the contribution to the newly
established Polish Institutional Protection Scheme
(IPS) in the amount of 59 2 million euros in 2022,
non-existent in 2021. This fund, set up by the
Bank together with the other participating
financial institutions was created with the aim of
ensure the stability of the local financial system
by ensuring the liquidity and solvency of the
member banks, serving simultaneously to support
situations of forced restructuring, carried out by
the Bank Guarantee Fund in banks that are public
companies.
The costs associated with foreign exchange
mortgage portfolio, in turn, despite continuing to
heavily penalise the performance of the Polish
subsidiary, recorded an overall reduction of 28 2
million euros, from 553 2 million euros in 2021, to
526 2 million euros in 2022. The additional
provisions booked to face the legal risk implicit in
this portfolio represent the most significant
portion of these costs, with their reduction
compared to the previous year contributing
decisively to the favourable evolution of the
overall amount. On the other hand, Bank
Millennium continues to focus on reducing the
foreign exchange mortgage portfolio, through
agreements with its Customers in order to convert
the credits to local currency or their early

2022 REPORT & ACCOUNTS |

|47
2 Before taxes and in the case of Bank Millennium S.A, before minority interests.
repayment (total or partially), translating into an
increase in the corresponding costs. The court
costs related to the claims filed by Bank
Millennium were also higher than in the previous
year.
Despite the previously mentioned impacts, the
favourable performance of net income of the
Group was possible mainly thanks to the evolution
of core income, which was 26.1% higher than the
2,316 million euros recorded in 2021, reaching
2,922 million euros at the end of 2022.
The growth in core income was observed in the
three geographies in which the Bank operates,
with the Polish subsidiary making a strong
contribution to this evolution, driven by the
increase of approximately 70% recorded in net
interest income. In the activity in Portugal, the
performance of core income reflects the increase
in both net interest income and net commissions,
while in the subsidiary in Mozambique, core
income benefited mainly from the rise in net
interest income. In consolidated terms, net
interest income grew by 35.3% in the last year,
from 1,589 million euros to 2,150 million euros,
with net commissions having evolved from 728
million euros to 772 million euros, representing an
increase of 6.1% compared to the previous year.
At the same time, the performance of the results
of the Group also benefited from the reduction of
3.8% recorded in operating costs, from 1,116
million euros in 2021 to 1,073 million euros in the
current year, despite the rise in inflation observed
in the geographies in which the Bank operates,
since the previous year had been penalised by the
extraordinary provision recognised as staff costs in
the activity in Portugal. This provision, in the
amount of 84 million euros, was booked to
address the costs of the headcount adjustment
plan carried out by the Bank that year.
Excluding the aforementioned provision,
considered as a specific item, and also excluding
the remaining specific items 3 in both periods, the
core operating profit of the Group amounted to
1,865 million euros at the end of 2022, showing a
significant increase of 44.4% compared to the
1,291 million euros achieved in the previous year.
The stated core operating profit, in turn,
increased by 54.0%, from 1,201 million euros in
2021, to 1,849 million euros in 2022.
CORE OPERATING PROFIT
Million euros
In addition to the increase in core income and the
reduction in operating costs, the net income of
the Group also benefited from the lower level of
provisioning for loans with impairment standing at
301 million euros in 2022, 13.8% below the 349
million euros recognised in 2021.
Additionally, the evolution of the net income of
the Group benefited, albeit to a lesser extent,
from the increase recorded in equity accounting
earnings and dividends from equity instruments,
which, in the last year, evolved from 57 million
euros to 69 million euros euros, and from 1 million
euros to 10 million euros, respectively.
Conversely, the net income of the Group in 2022
is penalised, as mentioned above, both by the
early recognition of potential costs arising from
the moratorium program (credit holidays), in the
amount of 283 million euros, recognised in results
on modification, and by the evolution of other
impairments and provisions, that reached 756
million euros, showing a growth of 43 million
euros from the 712 million euros recognised in
2021. However, it should be noted that the
evolution of other impairments and provisions is
influenced by the recognition of the
aforementioned total impairment of the goodwill
associated with the acquisition by the BCP Group
of the percentage of control over Bank Millennium
SA, in the amount of 102 1 million euros.
Net income of the Group was also negatively
influenced by the evolution of other net operating
income, which totaled a negative amount of 183
million euros compared to the also negative
amount of 126 million euros posted in 2021, with
this evolution strongly influenced by the increase
in mandatory contributions both in the activity in
Portugal and in the Polish operation. N et trading
income, in turn, also recorded a drop compared to

| 2022 REPORT & ACCOUNTS

48 |
3 Net income includes the negative impact, before taxes, of 16 million euros in 2022, 91 million euros in 2021 and 46 million euros in 2020, recognised as specific items. In 2022,
specific items included: i) the distribution of part of the results obtained by the Bank in 2021 by its employees, as approved at the General Meeting of Banco Comercial
Português, SA, held on 4 May, 2022; ii) costs with mortgage financing to former employees; iii) discretionary remuneration paid to employees as a measure to offset the impacts
of inflation; and iv) the recognition of a provision for other structure adaptation measures. In 2021, specific items are mainly related to the costs arising from the adjustment of
headcount carried out by the Bank that year, including a provision in the amount of 84 million euros. In 2020, specific items include costs related to headcount adjustment,
compensation cost for temporary remuneration cuts of employees under the participation in the results and income arising from the agreement with a former director of the
Bank), and costs related to acquisition, merger and integration of Euro Bank S.A., recognized by the Polish subsidiary. The profitability and efficiency indicators do not consider
the specific items recognised in net operating revenues of an immaterial amount in 2020, related to costs with the acquisition, merger and integration of Euro Bank S.A.
the 87 million euros calculated in 2021, amounting
to 50 million euros at the end of 2022.
Net income of the Group was also influenced by
the result of discontinued operations, which
evolved from 71 million euros in 2021 to 6 million
euros in the current year. In 2021, the result of
discontinued operations reflects the positive
impacts arising from the sale of the entire share
capital of Banque Privée BCP (Suisse) SA, and 70%
of the investment that the Group held in
Seguradora Internacional de Moçambique, SA
(“SIM”), now designated Fidelidade Moçambique -
Companhia de Seguros SA, which took place in
that year. In 2022, the 6 million euros amount
recorded in this item incorporates the sale price
adjustment of Banque Privée, according to
previously agreed conditions 4 and the correction
of the gain generated in the participation that the
Group held in “SIM”.

2022 REPORT & ACCOUNTS |

|49
4 The purchase price received may be adjusted positively or negatively in the future, according to typical adjustments in this kind of transactions, including the variation of the
equity in the completion date, and the ones that may result from the variation of stocks and/or flows of assets under management, in pre-determined dates and specified
portfolios.
QUARTERLY INCOME ANALYSIS

Million euros
| 2022 |  |
| 1st quarter | 2nd quarter | 3rd quarter | 4th quarter | Total | 2021 | 2020 restated
NET INTEREST INCOME | 465 | 520 | 561 | 604 | 2,150 | 1,589 | 1,532
OTHER NET INCOME |  |  |  |  |  |  |
Dividends from equity instruments | 1 | 12 | (4) | 1 | 10 | 1 | 5
Net commissions | 193 | 195 | 186 | 198 | 772 | 728 | 677
Net trading income | 43 | (1) | 33 | (25) | 50 | 87 | 141
Other net operating income | (17) | (158) | (1) | (6) | (183) | (126) | (165)
Equity accounted earnings | 16 | 17 | 12 | 24 | 69 | 57 | 68
TOTAL OTHER NET INCOME | 236 | 64 | 226 | 192 | 718 | 746 | 725
NET OPERATING REVENUES | 702 | 584 | 787 | 795 | 2,868 | 2,334 | 2,257
OPERATING COSTS |  |  |  |  |  |  |
Staff costs | 138 | 146 | 148 | 149 | 581 | 654 | 625
Other administrative costs | 83 | 80 | 89 | 101 | 353 | 324 | 330
Depreciation | 35 | 35 | 34 | 35 | 139 | 137 | 136
TOTAL OPERATING COSTS | 255 | 261 | 271 | 286 | 1,073 | 1,116 | 1,090
RESULTS BEFORE PROVISIONS AND IMPAIRMENTS | 447 | 323 | 516 | 510 | 1,794 | 1,219 | 1,166
Results on modification | (1) | (1) | (317) | 9 | (310) | 0 | 0
Impairment for loans (net of recoveries) | 90 | 90 | 62 | 59 | 301 | 349 | 510
Other impairment and provisions | 164 | 208 | 160 | 223 | 756 | 712 | 331
INCOME BEFORE INCOME TAX | 192 | 24 | (23) | 236 | 428 | 158 | 325
INCOME TAX |  |  |  |  |  |  |
Current | 18 | 27 | 30 | 34 | 110 | 81 | 109
Deferred | 67 | 43 | 22 | 61 | 195 | 122 | 24
NET (LOSS) / INCOME AFTER INCOME TAX FROM CONTINUING OPERATIONS | 106 | (46) | (76) | 140 | 124 | (46) | 193
Income from discontinued operations | 1 | 0 | 0 | 4 | 6 | 71 | 16
NET INCOME AFTER INCOME TAX | 108 | (46) | (76) | 144 | 130 | 25 | 208
Non-controlling interests | (5) | (8) | (99) | 34 | (78) | (113) | 25
NET INCOME ATTRIBUTABLE TO SHAREHOLDERS OF THE BANK | 113 | (38) | 23 | 110 | 207 | 138 | 183

| 2022 REPORT & ACCOUNTS

50 |
MAIN GEOGRAPHIES

Million euros
|  |  |  | International activity *
| Portugal | Total Int Op | Bank Millennium | BIM
| Dec22 | Dec21 | Dec20 | Dec22 | Dec21 | Dec20 | Dec22 | Dec21 | Dec20 | Dec22 | Dec21 | Dec20
NET INTEREST INCOME | 951 | 831 | 805 | 1,199 | 757 | 726 | 996 | 595 | 580 | 202 | 159 | 144
OTHER NET INCOME |  |  |  |  |  |  |  |  |  |  |  |
Dividends from equity instruments | 9 | 0 | 4 | 1 | 1 | 1 | 1 | 1 | 1 | 0 | 0 | 0
Net commissions | 561 | 514 | 482 | 211 | 213 | 195 | 173 | 182 | 167 | 39 | 31 | 28
Net trading income | 69 | 76 | 61 | -19 | 11 | 79 | -40 | -6 | 65 | 21 | 17 | 14
Other net operating income | -76 | -66 | -73 | -107 | -60 | -92 | -109 | -62 | -93 | 2 | 3 | 2
Equity accounted earnings | 68 | 58 | 58 | 1 | -1 | 9 | 0 | 0 | 0 | 2 | 0 | 0
TOTAL OTHER NET INCOME | 631 | 582 | 532 | 87 | 164 | 193 | 24 | 115 | 140 | 64 | 51 | 44
NET OPERATING REVENUES | 1,582 | 1,414 | 1,338 | 1,286 | 921 | 919 | 1,020 | 710 | 720 | 266 | 210 | 187
OPERATING COSTS |  |  |  |  |  |  |  |  |  |  |  |
Staff costs | 339 | 436 | 396 | 242 | 218 | 229 | 194 | 179 | 192 | 47 | 39 | 37
Other administrative costs | 184 | 176 | 178 | 169 | 148 | 151 | 118 | 107 | 113 | 51 | 40 | 38
Depreciation | 79 | 80 | 76 | 60 | 57 | 59 | 45 | 44 | 47 | 16 | 13 | 12
TOTAL OPERATING COSTS | 602 | 693 | 650 | 471 | 423 | 440 | 357 | 330 | 352 | 113 | 92 | 87
RESULTS BEFORE PROVISIONS AND IMPAIRMENTS | 980 | 721 | 687 | 815 | 498 | 479 | 663 | 380 | 367 | 153 | 119 | 101
Results on modification | 0 | 0 | 0 | -310 | 0 | 0 | -310 | 0 | 0 | 0 | 0 | 0
Impairment for loans (net of recoveries) | 218 | 273 | 354 | 82 | 76 | 156 | 74 | 71 | 125 | 8 | 4 | 30
Other impairment and provisions | 205 | 165 | 119 | 550 | 547 | 213 | 435 | 528 | 194 | 7 | 10 | 2
INCOME BEFORE INCOME TAX | 556 | 282 | 215 | -128 | -124 | 110 | -156 | -219 | 47 | 138 | 105 | 69
INCOME TAX |  |  |  |  |  |  |  |  |  |  |  |
Current | 17 | 11 | 12 | 92 | 70 | 96 | 56 | 44 | 74 | 36 | 27 | 22
Deferred | 190 | 98 | 68 | 4 | 24 | -44 | 4 | 29 | -32 | 0 | -5 | -12
NET (LOSS) / INCOME AFTER INCOME TAX FROM CONTINUING OPERATIONS | 349 | 173 | 134 | -224 | -219 | 58 | -217 | -292 | 5 | 102 | 83 | 59
Income from discontinued operations | 0 | 0 | 0 | 6 | 71 | 16 | 0 | 0 | 0 | 4 | 13 | 8
NET INCOME AFTER INCOME TAX | 349 | 173 | 134 | -219 | -148 | 74 | -217 | -292 | 5 | 106 | 96 | 67
Non-controlling interests ** | -5 | 0 | 0 | -73 | -113 | 25 | 0 | 0 | 0 | 0 | 1 | 1
NET INCOME ** | 354 | 173 | 134 | -146 | -35 | 49 | -217 | -292 | 5 | 106 | 96 | 67

* The international operations, in addition to the activity of Bank Millennium in Poland and Millennium Bim in Mozambique, also include
the activity of Banco Millennium Atlântico in Angola, Millennium BCP Bank & Trust in the Cayman Islands and until 2020 the activity of
Banque Privée BCP in Switzerland. The presentation of the international acitivity accounts is in accordance with the Consolidated Accounts
of the Group, and there may be differences in relation to the accounts disclosed locally. In 2022, the aggregate of international operations
includes the impairment of the goodwill related to the Polish subsidiary, recorded in the consolidated accounts. At the same time, this
aggregate includes, under the heading results of discontinued operations: (i) the results of the Swiss subsidiary, as well as the impacts of
the sale of the operation in 2021 and 2022; (ii) impacts arising from the sale of the SIM stake recorded in the consolidated accounts and
the historical information has been restated since January 2020, to ensure comparability.
** The net result shown in the columns relating to Bank Millennium and BIM corresponds to the consolidated result calculated by each of
those entities. Thus, the non-controlling interests presented in those same columns relate to subsidiaries of those entities, where
applicable.

2022 REPORT & ACCOUNTS |

|51
In the activity in Portugal, net income amounted
to 354 million euros in 2022, showing a significant
growth from the 173 million euros achieved in the
previous year.
NET INCOME
Activity in Portugal
Million euros
The performance of the activity in Portugal
largely benefited from the growth of 166 million
euros recorded in core income, which rose from
1,346 million euros in 2021 to 1,512 million euros
in 2022, as a result of the favourable evolution
evidenced mainly by net interest income, but also
by net commissions.
Effectively, net interest income recorded a solid
growth of 120 million euros (+14.4%) compared to
the previous year, mainly reflecting the positive
impact resulting from the management of the
securities portfolio, namely the public debt
portfolio. The commercial business also evolved
favourably, reflecting the higher income
generated by the customer loan portfolio, driven
on the one hand by the increase in credit volumes
and on the other hand by the recent increases in
interest rates, with a growing impact on the
income generated by the performing loan
portfolio.
Net commissions, in turn, were 46 million euros
(9.0%) higher than in 2021, reflecting, in part, the
progressive normalisation of economic activity,
resulting from the favourable evolution of the
pandemic associated with COVID-19.
On the other hand, the 91 million euros reduction
(13.1%) in operating costs also contributed
significantly to the favourable evolution of the net
income of the activity in Portugal. It should be
noted, however, that this reduction was
determined by the recognition as staff costs, in
2021, of a provision, in the amount of 84 million
euros, to address the costs of the headcount
adjustment plan that the Bank carried out that
year.
Even excluding the aforementioned provision,
considered as a specific item, and also excluding
the remaining specific items 3 in both years,
operating costs in the activity in Portugal showed
a 2.8% reduction compared to the previous year,
which together with the expansion of core income
led to a 24.6% (183 million euros) growth in core
operating profit excluding specific items, from
743 million euros in 2021 to 926 million euros in
2022. The stated core operating profit, in the
activity in Portugal, in turn, increased 257 million
euros, from 653 million euros in 2021, to 910
million euros in 2022.
CORE OPERATING PROFIT
Activity in Portugal
Million euros
In addition, it is also important to highlight the
significant reduction in the loan portfolio's
provisioning needs in the activity in Portugal,
compared to the previous year, contributing
largely to the favourable evolution of net income
from the activity in Portugal. In 2022, loans
impairment fell by 55 million euros (20.1%) from
the previous year, reflecting a better risk
perspective of this portfolio in relation to 2021.
Although to a lesser extent, equity accounted
earnings and dividends from equity instruments
also contributed favourably to the evolution of
net income from the activity in Portugal in the
last year, showing each one of this items increases
of 9 million euros.

| 2022 REPORT & ACCOUNTS

52 |
Conversely, the evolution of the net income of the
activity in Portugal was influenced by the increase
in other impairments and provisions in 40 million
euros (+24.1%), mainly justified by the increase in
impairment associated with non-current assets
held for sale, namely related to real estate
properties received as payment in kind, and
provisions for others risks. Other net operating
income and net trading income, in turn, were 10
million euros (15.4%) and 6 million euros (8.4%)
lower than in 2021, respectively.
In the international activity, net income stood at
a negative amount of 146 million euros in 2022,
showing a very significant drop compared to the
also negative amount of 35 million euros recorded
in 2022, despite the fact that the operations
abroad have improved their results compared to
2021.
In this sense, it should be noted that despite the
good operating performance of Bank Millennium
SA, the factors of uncertainty, namely the
material impacts arising from new legislative
measures, led to the total impairment of the
goodwill associated with the acquisition by the
BCP Group of percentage of control over Bank
Millennium SA in the amount of 102 million euros
at 30 June 2022, thus proving to be one of the
factors that most penalised the evolution of the
result of the international activity compared to
the previous year.
Additionally, the result of the international
activity, in 2022, is also penalised by the early
recognition of potential costs arising from the
moratorium program (credit holidays) enacted by
the President of the Republic of Poland in July
2022, in the amount of 283 million euros,
recognised as results on modification.
Net income of the international activity was also
influenced by the 65 million euros reduction in
the results of discontinued operations following
the positive impacts that occurred in 2021,
associated with the sale of the entire share
capital of Banque Privée BCP (Suisse) SA, and 70%
of the stake that the Group held in Seguradora
Internacional de Moçambique, SA (“SIM”), now
designated Fidelidade Moçambique - Companhia
de Seguros SA, which occurred in that year.
In this sense, reference should be made to the
gain, in the amount of 51 million euros, following
the conclusion of the agreement to sell the entire
share capital of Banque Privée BCP (Suisse) S.A.,
to Union Bancaire Privée, UBP SA. In addition to
the gain obtained from the sale operation, the
results of discontinued operations in 2021 also
include the results generated by the current
activity of that entity up to the date of the sale,
which totaled 1 million euros.
Regarding the sale, at the end of 2021, of 70% of
the stake that the Group held in “SIM”, through
its subsidiary BIM - Banco Internacional de
Moçambique, SA, now holding only a minority
stake of around 22% in the insurance company, a
gain of 12 million euros was generated, net of
taxes and before minority interests. The result
generated by the insurance company up to the
moment of its disposal, in the amount of 7 million
euros, is also reflected as a result of discontinued
operations in 2021.
In 2022, the amount of 6 million euros recorded
under this heading includes an adjustment to the
sale price of Banque Privée, in accordance with
previously agreed conditions 4 and the correction
of the gain obtained on the stake that the Group
held in “SIM”.
The evolution of net income of the international
activity, on the other hand, benefited, as
previously mentioned, from the improvement in
the results presented both by the Polish and
Mozambican subsidiaries, and by the Angolan
operation.
Despite maintaining a solid operating performance
and its contribution having improved compared to
the previous year, the Polish subsidiary continues,
however, to present a negative result, due to the
extraordinary effects that have been strongly
influencing its performance.
In this sense, in addition to the upfront
recognition of potential costs arising from the
moratorium program (credit holidays), recognised
in 2022 as results on modification, in the amount
of 283 million euros, also the increase in the
mandatory contributions to which the Polish
subsidiary was subject (from 94 million euros in
2021 to 121 million euros in 2022), influenced the
performance of the international activity. On the
other hand, the costs associated with the foreign
exchange mortgage loans portfolio, despite
continuing to heavily penalise the result of the
Polish operation, recorded, globally, a reduction
of 28 million euros in the last year, from 553 1
million euros in 2021, to 526 1 million euros in
2022.
The impact of the extraordinary effects referred
to above was offset by the significant increase
recorded in core income from the international
activity, which evolved from 971 million euros in
2021 to 1,410 million euros in 2022. The
performance of net interest income in the Polish
operation was decisive for this evolution, driven
by successive increases in reference interest rates
between the last quarter of 2021 and the third
quarter of 2022, putting an end to the period of
rates close to zero set by the National Bank of
Poland in the initial phase of the pandemic.

2022 REPORT & ACCOUNTS |

|53
Benefiting from the increase in core income and
despite the impact of rising levels of inflation on
operating costs, the core operating profit of the
international activity grew by 71.4%, from 548
million euros in 2021 to 939 million euros in 2022.
NET INCOME
International activity
Million euros
CORE OPERATING PROFIT
International activity
Million euros
Bank Millennium in Poland, despite showing a
negative net income of 217 million euros in 2022,
evolved favourably compared to the also negative
amount of 292 million euros recorded in 2021,
having even returned to positive results in the
fourth quarter of 2022, after an extended period
of quarters with negative results.
It is important to reinforce that these results were
possible despite the extraordinary effects that
continue to penalise the performance of the
subsidiary, thus demonstrating its solid operating
performance.
Among the extraordinary effects mentioned, it is
worth mentioning the early recognition of the
potential costs arising from the moratorium
program (credit holidays) enacted in July 2022.
Thus, following the signing by the President of the
Republic of Poland of the Law of 7 July 2022 on
crowdfunding for business ventures and assistance
to borrowers, introducing, among others, access
to moratoriums (credit holidays) of up to eight
months in 2022-2023 for borrowers of Zloty-
denominated mortgage loans, the Bank estimated
the maximum impact of the implementation of
this Law, if all eligible borrowers were to use this
instrument, having recognised in advance 80% of
the respective costs in the results for the third
quarter of 2022, corresponding to 305 million
euros. In the fourth quarter of 2022, a review was
carried out of the effective cost and use of credit
moratoriums by eligible borrowers in the second
half of 2022, and ongoing requests to suspend
housing loan instalments in Zlotys in 2023 were
analysed. As a result, the estimated total cost of
credit moratoriums was reduced to 283 1 million
euros at the end of 2022, with a positive impact
on the results for the fourth quarter of the year.
These costs are recognised under the heading
results on modification, justifying almost its
entire amount in 2022. Additionally, this heading
also includes costs associated with contractual
amendments to mortgage loans in foreign
exchange within the scope of agreements entered
into by the subsidiary with the customers holding
these credits.
The net income evolution of the operation in
Poland also continued to be penalised by the
increase in costs borne with the mandatory
contributions to which it was subject, from 94
million euros in 2021 to 121 million euros in 2022,
with special emphasis on the contribution to the
newly created Polish institutional protection fund
(IPS - Institutional Protection Scheme), which
amounted to 59 1 million euros in 2022, non-
existent in 2021. This fund, constituted by the
Bank together with the other participating
financial institutions, was created with the
objective of guaranteeing the stability of the local
financial system, ensuring the liquidity and
solvency of member banks, while serving to
support situations of forced restructuring carried
out by the Banking Guarantee Fund in banks that
are public limited companies. On the other hand,
the cost of the special tax on the Polish banking
sector was 32 million euros lower than the cost
borne in 2021, reflecting the suspension of its
payment, following the activation of the Bank
Millennium Recovery Plan.
Costs associated with the foreign exchange
mortgage loans portfolio, despite remaining high
and continuing to strongly influence Bank
Millennium's results, recorded a global reduction
of 28 million euros, from 553 1 million euros in
2021 to 526 1 million euros in 2022. The additional

| 2022 REPORT & ACCOUNTS

54 |
provisions booked to face the legal risk implicit in
the foreign exchange mortgage loans portfolio
represent the most significant portion of these
costs, with their reduction compared to the
previous year contributing decisively to the
favourable evolution of the overall amount of
costs associated with this portfolio. In fact, in
2022, the reinforcement of impairments and
provisions, to face the legal risk associated with
this portfolio, totalled 394 million euros, which
compares with 457 million euros recognized in
2021 (net of the amount originated by the
operations of Euro Bank S.A., to be repaid by a
third party).
On the other hand, and taking into account the
focus of the subsidiary on reducing its portfolio of
foreign exchange mortgage loans, there was an
increase in costs arising from the agreements
signed by the Polish subsidiary in the meantime
with customers holding these loans, in order to
change the respective contracts or to negotiate
the conversion of credits to local currency or their
(total or partial) early repayment. The legal costs
related to the claims filed by Bank Millennium,
which are mainly aimed at requesting the return
of costs associated with the use of capital by
customers during the period of the respective
loans, also proved to be higher compared to the
previous year. Although they are mostly
recognised in results on modification, in net
trading income and in other net operating income,
there are other items in the profit and loss
account whose evolution also reflects the impact
of costs associated with foreign exchange
mortgage loans portfolio, such as other
administrative costs, which include the costs of
legal advice.
In addition to the impact of the aforementioned
extraordinary effects, the results of Bank
Millennium, SA were strongly influenced by the
solid growth in core income, namely with regard
to net interest income, which grew by 401 million
euros (67.4%), driven by the successive increases
in reference interest rates verified between the
third quarter of 2021 and the third quarter of
2022, putting an end to the rates close to zero set
by the National Bank of Poland in the initial phase
of the pandemic.
Additionally, the efforts to continue with
measures that allow the improvement of the
efficiency of the Polish subsidiary, allowed to
offset the increase in costs arising from the rising
levels of inflation recorded in the country.
In this sense, reference should be made to the
reduction in the number of employees, from 7,079
to 6,987 and the optimisation of the physical
distribution network, with the reduction in the
number of branches, from 655 to 635, associated
with the Bank's progress in the area of
digitalisation of the commercial business.
The combined impact of the increase in core
income with the evolution of operating costs led
the core operating profit of the subsidiary to show
a very expressive growth (81.7%), rising from 447
million euros in 2021 to 811 million euros in 2022.
Cost to income and cost to core income ratios also
recorded a significant improvement from 46.5%
and 42.5% in 2021 to 35.0% and 30.6% in 2022,
respectively.
Millennium bim in Mozambique, in turn, also
contributed positively to the performance of the
net income of the international activity, with its
result increasing by 10.9%, from 96 million euros
in 2021, to 106 million euros in the current year.
This evolution was possible thanks to the
significant increase recorded in net operating
revenues, which more than offset the joint impact
of the increase in operating costs and the drop in
income from discontinued operations.
Despite the favourable performance of most of
the items that make up the net operating
revenues of the subsidiary, benefiting in part from
the exchange rate evolution of the Metical against
the euro, it deserves particular mention, due to
its materiality, the growth of net interest income.
On the other hand, the aforementioned exchange
rate evolution, together with the inflationary
effect, had a penalising effect on the evolution of
the operating costs of the subsidiary in
Mozambique.
On the other hand, the gain generated at the end
of 2021 with the sale of 70% of the subsidiary's
stake in Seguradora Internacional de Moçambique,
S.A. (“SIM”)5, now designated Fidelidade
Moçambique - Companhia de Seguros S.A. as well
as the result of the subsidiary in that year, both
reflected as income from discontinued operations,
in accordance with IFRS 5, in the amount of 6
million euros and 7 million euros, respectively,
compare with the 4 million euros accounted for
under the same heading in 2022, relating to
adjustments made to the sale price.
Millennium bim ended the year with 2,504
employees, 8 more than in the previous year and
with 197 branches, two less than in 2021.
In what Angola is concerned, its contribution to
net income from international activity in 2022 was
negative by 7 million euros, improving from the
also negative amount of 11 million euros in the
previous year. Despite the less negative impact
resulting from the appropriation of the results of
Banco Millennium Atlântico recognised in equity

2022 REPORT & ACCOUNTS |

|55
5 The subsidiary now holds only a minority stake of 22%.
accounted earnings, it was the lower level of
provisioning aimed at tackling the risks associated
with the context in which the Angolan operation
develops its activity that mainly justified this
evolution, going from 10 million euros in 2021 to 5
million euros in 2022. Conversely, the contribution
of the Angolan operation in 2022 was influenced
by the impairment of goodwill in the amount of 1
million euros.
NET INCOME OF INTERNATIONAL ACTIVITY

Million euros
| 2022 | 2021 | 2020 restated | Chg. 22/21
Bank Millennium in Poland (1) | (217) | (292) | 5 | 25.8%
Costs associated with foreign exchange mortgage loans | (505) | (534) | (151) | -5.5%
Bank Millennium (exc. costs associated with foreign exchange mortgage loans) | 288 | 242 | 156 | 19.0%
Millennium bim in Mozambique (2) | 102 | 83 | 59 | 23.0%
Banco Millennium Atlântico (BMA) (3) | (7) | (11) | (7) | 32.4%
Other (4) | (102) | 1 | 2 | <-200%
Income from discontinued operations (5) | 6 | 71 | 16 | -92.2%
Banque Privée BCP (Suisse) S.A. | 2 | 52 | 7 | -96.6%
SIM - Seguradora Internacional de Moçambique, S.A. | 4 | 19 | 8 | -79.7%
Non-controlling interests | (73) | (113) | 25 | 35.7%
NET INCOME OF INTERNATIONAL ACTIVITY | (146) | (35) | 49 | <-200%

(1)The amounts showed are not deducted from non-controlling interests. In 2022, the activity in Poland generated a
negative net income of 217 million euros, of which also negative amount of 109 million euros attributable to the Bank.
(2)Corresponds to net income after income taxes from continuing operations. Net income does not include the net
income generated by SIM, now designated Fidelidade Moçambique - Companhia de Seguros S.A. up to the date of disposal
of 70% of the stake that the Group held in the insurance company, nor the gain recognised with the aforementioned
disposal in 2021. The correction of the gain, accounted for in 2022, is also not included in the reported results. Income
arising from discontinued operations, is presented in the line "Income from discontinued operations". The non-controlling
interests related to the holdings held in Millennium bim and in the insurance company, meanwhile disposed, are
reflected in the line "Non-controlling interests".
(3)Corresponds to the proportion of the results of Banco Millennium Atlântico appropriated by the Group, considering
the equity method. The amounts presented also include the amortisation of the effect of applying IAS 29 until 31
December 2018, impairment of goodwill and provisions associated with the investment in this associate.
(4)In 2022, includes the total impairment of the goodwill associated with the acquisition by the BCP Group of the
percentage of control over Bank Millennium SA. Until 2021, includes the net income of the operation in Cayman Islands,
fully attributable to the Bank.
(5)Income arising from discontinued operations includes the net income of Banque Privée up to the date of its disposal
(1 million euros in 2021 and 7 million euros in 2020 - restated), as well as the gain, in the amount of 51 million euros,
generated with the sale of the participation in 2021 and the adjustment of that gain (2 million euros) in 2022.
Additionally, income from discontinued operations also includes the net income generated by SIM, now designated
Fidelidade Moçambique - Companhia de Seguros S.A. (7 million euros in 2021 and 8 million euros in 2020 - restated) up to
the date of the sale of 70% of the stake that the Group held in the insurance company. The gain generated with the sale,
in the amount of 12 million euros net of taxes (of which 6 million euros reflected in the Millennium bim accounts) is also
reflected in this heading, as well as the correction made to that value (4 million euros) in 2022.

| 2022 REPORT & ACCOUNTS

56 |
NET INTEREST INCOME
Net interest income reached 2,150 million euros in
2022, showing a significant growth of 35.3%
compared to the 1,589 million euros posted in the
previous year.
The favourable evolution of net interest income
was observed in the three geographies in which
the Bank operates, with the Polish subsidiary,
growing the most, by almost 70%.
NET INTEREST INCOME
Million euros
In the activity in Portugal, net interest income
stood 14.4% above the 831 million euros achieved
in 2021, reaching 951 million euros at the end of
2022.
The favourable performance of net interest
income in the activity in Portugal reflects the
positive impact resulting from the management of
the securities portfolio, as well as the favourable
evolution of the commercial business.
In this context, it is worth mentioning the
contribution of the income generated by the
sovereign debt portfolio, benefiting from the
evolution of interest rates and portfolio rotation,
although the other securities also generated
higher income compared to 2021.
The higher income generated by the loan portfolio
stems, on the one hand, from the increase in
credit volumes and, on the other hand, from the
recent increases in interest rates, which have had
a growing impact on the income generated by the
performing loans portfolio. To the favourable
evolution of income generated by credit
contributed, to a large extent, loans granted to
companies within the scope of national and
European guarantees to support activity in
Portugal.
Customer funds, despite the increase in the
average balance of interest-bearing deposits
compared to 2021, still had a minor impact on the
evolution of net interest income in the activity in
Portugal.
Net interest income of the activity in Portugal
also benefited from the higher income from other
assets and liabilities and from the net investment
of surplus liquidity with other credit institutions.
On the other hand, there was a reduction in the
costs incurred with subordinated debt, reflecting
the maturity of some issues over the last year.
The performance of net interest income in the
activity in Portugal was also influenced by lower
income resulting from funding obtained from the
European Central Bank, through participation in
targeted longer-term refinancing operations
(TLTRO).
In fact, the income recorded in 2022, resulting
from the negative interest rate applied, was lower
than that recorded in 2021, due, on the one hand,
to the end of interest rate discount period since
23 June 2022, and on the other hand, to the
change in the methodology for calculating
interest. At the same time, reference should be
made to the increase in net interest income
resulting from liquidity deposited at the Bank of
Portugal.
Finally, reference should be made to the increase,
compared to the previous year, in the costs
incurred with issued debt, resulting from issues
placed on the market during 2021 and 2022, only
partially offset by the repayment of a covered
bond issue in May 2022. In this sense, it should be
noted the launch of a senior preferred issue, in
the amount of 500 million euros, in the first
quarter of 2021, as well as a new issue, of
securities representing senior preferred social
debt, also in the amount of 500 million euros, at
the end of the third quarter of 2021, both placed
under the Bank's Euro Note Programme.
Also under its Euro Note Programme, the Bank
returned to the market, in October 2022, to place
an issue of senior preferred debt securities, in the
amount of 350 million euros. It should be noted
that all the issues mentioned are aimed at
meeting the requirements known as
“MREL” (Minimum Requirements for Own Funds
and Eligible Liabilities).

2022 REPORT & ACCOUNTS |

|57
NET INTEREST INCOME
Activity in Portugal
Million euros
In the international activity, net interest income
amounted to 1,199 million euros at the end of
2022 showing a significant growth of 58.3% from
the 757 million euros accounted in 2021.
This evolution was mainly due to the performance
of the Polish subsidiary, with the net interest
income at the subsidiary in Mozambique also
presenting a favourable performance, albeit with
a smaller impact.
NET INTEREST INCOME
International activity
Million euros
In the Polish subsidiary, net interest income was
boosted by successive increases in the reference
interest rates that have been taking place since
the last quarter of 2021 and the third quarter of
2022, ending the period of interest rates close to
zero that had been set by the National Bank of
Poland since the initial phase of the pandemic and
which had been penalising the net interest income
of the subsidiary. The impact of these interest
rate increases was mainly felt on the interest
income of loans to customers, which played a
decisive role in the favourable evolution of the
net interest income of the subsidiary.
On the other hand, the favourable performance of
net interest income in the Mozambican operation
benefited from the increase in interest rates and
also reflects the exchange rate evolution of
Metical against the euro.
In consolidated terms, net interest margin stood
at 2.5% in 2022, showing a favourable evolution
from 1.9% in the previous year, mainly reflecting
the performance of the international activity. In
the activity in Portugal net interest margin also
recorded an increase compared to the previous
year, although less significant.
Thus, in the activity in Portugal, net interest
margin evolved from 1.4% in 2021 to 1.5% in 2022,
mainly influenced by the increase in interest rates
underlying the credit and sovereign debt
portfolios.
In turn, net interest margin in the international
activity, increased significantly, from 3.1% in 2021
to 4.8% in 2022, mainly reflecting the reversal of
the evolution trend of the reference interest rates
set by the National Bank of Poland, which after a
period of rates close to zero, announced
successive increases between the last quarter of
2021 and the third quarter of 2022.

| 2022 REPORT & ACCOUNTS

58 |
AVERAGE BALANCES

Million euros
|  | 2022 |  | 2021 |  | 2020 restated
| Average Balance | Yield | Average Balance | Yield | Average Balance | Yield
INTEREST EARNING ASSETS |  |  |  |  |  |
Deposits in credit institutions | 9,575 | 1.3% | 6,116 | 0.3% | 4,842 | 0.7%
Financial assets | 19,742 | 1.8% | 20,116 | 0.8% | 17,341 | 1.1%
Loans and advances to customers | 56,731 | 3.8% | 55,045 | 2.7% | 52,970 | 2.9%
TOTAL INTEREST EARNING ASSETS | 86,048 | 3.0% | 81,277 | 2.0% | 75,154 | 2.3%
Discontinued operations (1) | — |  | 726 |  | 789 |
Non-interest earning assets | 9,896 |  | 8,481 |  | 8,887 |
TOTAL ASSETS | 95,944 |  | 90,484 |  | 84,829 |
INTEREST BEARING LIABILITIES |  |  |  |  |  |
Amounts owed to credit institutions | 8,805 | -0.2% | 9,110 | (0.8%) | 8,164 | (0.4%)
Deposits and other resources from customers | 72,995 | 0.6% | 66,705 | 0.1% | 61,963 | 0.3%
Debt issued and financial liabilities | 3,263 | 1.0% | 3,523 | 0.8% | 3,076 | 1.0%
Subordinated debt | 1,377 | 5.1% | 1,248 | 4.5% | 1,449 | 4.8%
TOTAL INTEREST BEARING LIABILITIES | 86,439 | 0.6% | 80,586 | 0.1% | 74,652 | 0.3%
Discontinued operations (1) | — |  | 761 |  | 835 |
Non-interest bearing liabilities | 3,127 |  | 1,890 |  | 2,022 |
Shareholders' equity and Non-controlling interests | 6,377 |  | 7,247 |  | 7,319 |
TOTAL LIABILITIES, SHAREHOLDERS' EQUITY AND NON-CONTROLLING INTERESTS | 95,944 |  | 90,484 |  | 84,829 |
NET INTEREST MARGIN (2) |  | 2.5% |  | 1.9% |  | 2.0%

(1)Includes, in 2021 and in 2020, the activity of the Swiss subsidiary (adjusted from the inter group' movements) and
from Seguradora Internacional de Moçambique, S.A. ("SIM"), until the date of the respective disposals.
(2)Net interest income as a percentage of average interest earning assets.
Note: Average balance calculated based on monthly average of end of month balances, accumulated in the period.
Interest related to hedge derivatives were allocated, in 2022, 2021 and 2020, to the respective balance item.
The Group's interest earning assets in 2022 stood at 86,048 million euros, compared to 81,277 million euros
in 2021. The recorded growth benefited from the increase in deposits in credit institutions, from 6,116
million euros in 2021, to 9,575 million euros in 2022 and from the evolution of loans to customers, which
went from 55,045 million euros to 56,731 million euros in the same period. Conversely, despite a smaller
scale, there was a decrease in financial assets, from 20,116 million euros in 2021 to 19,742 million euros in
2022. It is also important to note that together with the generalised increase in the average balances of the
main categories of assets, the respective implicit rate also showed an increase compared to the previous
year, reflecting the context of reference rates prevailing in Portugal, Poland and Mozambique.
Non-interest earning assets, in turn, were also higher than the 8,481 million euros in 2021, totalling 9,896
million euros in 2022.
In terms of average balance sheet structure, interest earning assets represented 89.7% of average net assets
in 2022, keeping their relative weight from the previous year. Although its relative weight in the balance
sheet structure fell slightly from 60.8% in 2021 to 59.1% in 2022, loans to customers remained the main
aggregate in the interest-earning assets portfolio, representing 65.9% of it in 2022 (67.7% in 2021). Financial

2022 REPORT & ACCOUNTS |

|59
assets portfolio, in turn, reduced its relative weight in the balance sheet structure, decreasing from 22.2%
in 2021 to 20.6% in 2022. Deposits in credit institutions, by contrast, reinforced its weight in the balance
sheet structure, increasing from 6.8% in 2021, to 10.0% in 2022.
Interest bearing liabilities increased from 80,586 million euros in 2021, to 86,439 million euros in 2022,
mainly reflecting the evolution of customer deposits, whose average balance, in consolidated terms,
evolved from 66,705 million euros in 2021, to 72,995 million euros in 2022, primarily fuelled by the increase
in deposits obtained in Portugal, but also benefiting from the growth in international activity.
The remaining items that contribute to average interest-bearing liabilities did not show materially relevant
changes, so that the structure of average interest-bearing liabilities also did not show significant changes
compared to the previous year. As such, Customer deposits saw their relative weight in the balance of
interest-bearing liabilities increase from 82.8% in 2021 to 84.4% in 2022, remaining the main financing and
activity support instrument. Deposits from credit institutions, which include additional funding obtained
from the European Central Bank, within the scope of the targeted longer-term refinancing operation
(TLTRO III), in turn, now represent 10.2% of the average balance of interest-bearing liabilities in 2022
(11.3% in 2021), while the aggregate of debt securities issued and financial liabilities represented 3.8% in
the same period (4.4% in 2021).
OTHER NET INCOME
Other net income, aggregates dividends from equity instruments, net commissions, net trading income,
other net operating income and equity accounted earnings. In 2022, other net income totalled 718 million
euros, standing 3.8% below the 746 million euros in the previous year, reflecting the reduction in the
international activity, despite being largely offset by the increase in the activity in Portugal.
The favourable performance of other net income, in the activity in Portugal, resulted in an increase of 8.3%
compared to the 582 million euros accounted for in 2021, rising to 631 million euros at the end of 2022. The
growth in 46 million euros (+9.0%) recorded in net commissions, reflecting, in part, the progressive
normalisation of economic activity, resulted from the favourable evolution of the pandemic associated with
COVID-19. Equity accounted earnings and dividends from equity instruments, in turn, were also above the
amount calculated in 2021, with these items showing increases of 9 million euros each. On the other hand,
other net operating income and net trading income were, respectively, 10 million euros and 6 million euros
lower than the amount recognised in 2021. It should be noted that the evolution of other net operating
income is strongly influenced by the generalised increase in costs incurred with mandatory contributions in
the last year.
In the international activity, other net income amounted to 87 million euros in 2022, well below the 164
million euros obtained in the previous year. This evolution was largely influenced by the 46 million euros
and 30 million euros reductions in other net operating income and in net trading income, respectively. Net
commissions stood 2 million euros below the amount posted in 2021, while equity accounted earnings
increased 2 million euros. Dividends from equity instruments remain in line with the amount recorded in the
previous year, amounting 1 million euros at the end of 2022.
The Polish subsidiary was mainly responsible for this evolution, with its performance being heavily penalised
by the increase in costs incurred with the mandatory contributions to which the subsidiary was subject and
by the impacts associated with the portfolio of mortgage loans in foreign currency, both recognised in other
net operating income, and in the particular case of the impacts associated with the portfolio of mortgage
loans in foreign currency, also on net trading income.
Other net operating income at the subsidiary in Mozambique, in turn, stood at a higher level than the
previous year, benefiting from the exchange rate evolution of the Metical against the euro.

| 2022 REPORT & ACCOUNTS

60 |
OTHER NET INCOME

Million euros
| 2022 | 2021 | 2020 restated | Chg. 22/21
Dividends from equity instruments | 10 | 1 | 5 | >200%
Net commissions | 772 | 728 | 677 | 6.1%
Net trading income | 50 | 87 | 141 | -42.3%
Other net operating income | (183) | (126) | (165) | -44.8%
Equity accounted earnings | 69 | 57 | 68 | 20.7%
TOTAL | 718 | 746 | 725 | -3.8%
of which: |  |  |  |
Activity in Portugal | 631 | 582 | 532 | 8.3%
International activity | 87 | 164 | 193 | -46.7%

DIVIDENDS FROM EQUITY INSTRUMENTS
Income from equity instruments, which incorporates dividends and income from equity shares received from
investments classified as financial assets at fair value through other comprehensive income and as financial
assets held for trading, evolved from 1 million euros booked in 2021, to 10 million euros at the end of 2022.
This evolution reflects the performance of income associated with investments that are part of the shares
portfolio of the activity in Portugal, which totalled 9 million euros in the current year, showing a very
significant growth compared to the immaterial amount calculated in the previous year. In the international
activity, more specifically in the Polish subsidiary, dividends from equity instruments totalled 1 million
euros, in line with the amount calculated in 2021.
NET COMMISSIONS
Net commissions include commissions related to
the banking business and commissions more
directly related to financial markets.
In 2022, net commissions showed a 6.1% growth
from the 728 million euros recorded in 2021,
reaching 772 million euros at the end of 2022.
This performance reflects, in part, the progressive
normalisation of the economic activity, arising
from the favourable evolution of the pandemic
associated with COVID-19.
The favourable performance of net commissions,
as a whole, was determined by the increase
recorded in the activity in Portugal, reflecting the
evolution of banking commissions, with
commissions related to markets also standing at a
higher level than that achieved in the previous
year, although with a lesser impact. The
contribution of international activity to the
evolution of this item, in turn, was slightly lower
than in 2021, with the increase in banking
commissions being fully offset by the drop in
commissions related to markets.
In consolidated terms, there was thus an
improvement in bank commissions, particularly
relevant in the activity in Portugal. In the
international activity this type of commissions
also stood at a higher level than that reached in
the previous year. Commissions related to the
markets, in turn, were below the amount reached
in 2021, since the increase recorded in the
activity in Portugal was not enough to offset the
reduction verified in the international activity.
NET COMMISSIONS
Million euros

2022 REPORT & ACCOUNTS |

|61
In consolidated terms, commissions related to the
banking business totalled 665 million euros in
2022, 8.1% above the 615 million euros achieved
in the previous year, benefiting from the increases
of 9.4% and 5.0% obtained in the activity in
Portugal and in the international activity,
respectively. This evolution was mainly due to the
increase in commissions generated by cards and
transfers, which, in Group terms, grew by 38
million euros compared to the previous year, from
182 million euros to 220 million euros.
Notwithstanding the favourable evolution of the
two types of commissions that make up this
aggregate, special mention should be made of the
growth of approximately 50% recorded in
commissions related to transfers.
The performance of commissions related to the
management and maintenance of accounts should
also be highlighted, as they were 17 million euros
higher than the 149 million euros recognized in
2021, totalling 165 million euros at the end of
2022, driven by the contribution of the activity in
Portugal, slightly offset by the reduction recorded
in the International activity.
Bancassurance commissions, which include
commissions obtained from placing insurance
products through the Bank's distribution networks
operating in Portugal and Poland, in turn, stood at
3 million euros above the amount calculated in
2021, reflecting essentially the growth in the
Polish subsidiary, since in the activity in Portugal
this type of commission remained stable
compared to the amount recorded in the previous
year.
Conversely, commissions related to credit and
guarantees showed a reduction of 11 million euros
compared to the 155 million euros obtained in
2021, standing at 144 million euros in 2022,
reflecting the performance of both the activity in
Portugal, and the international activity.
Commissions related to financial markets totalled
107 million euros in December 2022, standing 6
million euros below the 113 million euros
calculated in 2021, with the increase recorded in
the activity in Portugal being completely offset by
the reduction that this type of commission had in
the international activity. The 8 million euros
drop in commissions associated with asset
management and distribution contributed largely
to this evolution, determined by the performance
of the international activity, whose impact
completely offset the increase in the activity in
Portugal. On the other hand, commissions
associated with securities grew by 2 million euros
compared to the previous year, reflecting the
evolution of these commissions in the activity in
Portugal, partially offset by the reduction
recorded in the international activity.
In the activity in Portugal, net commissions grew
by 9.0% compared to the 514 million euros
recorded in 2021, rising to 561 million euros at
the end of the current year. This performance
reflects, in part, the progressive normalization of
economic activity, resulting from the favourable
evolution of the pandemic associated with
COVID-19. Both commissions related to the
banking business, which increased by 9.4%, and
commissions related to financial markets, which
were 6.7% above the amount accounted for in
2021, contributed to the favourable evolution of
net commissions in the activity in Portugal.
NET COMMISSIONS
Activity in Portugal
Million euros
In 2022, commissions related to the banking
business, in the activity in Portugal, amounted to
473 million euros, showing an increase of 41
million euros compared to the 432 million euros
recorded in the previous year. Commissions
related to cards and transfers were the main
drivers of this performance, rising from 111
million euros in 2021 to 140 million euros in 2022.
The 28 million euros growth was mainly due to
commissions associated with transfers, which
mostly include amounts charged for transactions
carried out with cards and the respective payment
networks, for bank transfers and for the use of
points of sale (POS), largely reflecting the
recovery of transaction levels existing before the
outbreak of the pandemic.
At the same time, the performance of
commissions related to the banking business in the
activity in Portugal also benefited from the
growth in management and maintenance of
accounts commissions, which increased by 20
million euros, from 120 million euros in 2021 to
140 million euros in 2022 , reflecting, on the one
hand, the dynamics of new customers acquisition
and, on the other, greater commercial dynamism
and adequate management of value offers, with
customers subscribing integrated solutions and
service packages.

| 2022 REPORT & ACCOUNTS

62 |
Conversely, the performance of commissions
related to the banking business, in the activity in
Portugal, was penalised by the reduction in
commissions associated with credit and
guarantees, which together totalled 7 million
euros below the 107 million euros achieved in
2021, standing at 99 million euros at the end of
2022.
Commissions from the bancassurance activity,
with regard to the activity in Portugal, remained
in line with the amounts achieved in the previous
year, totalling 85 million euros at the end of 2022.
Commissions related to the market, in the activity
in Portugal, in turn, evolved from 82 million euros
in 2021 to 88 million euros in 2022. The 6 million
euros growth benefited, on the one hand, from
the performance of commissions associated with
securities which were 3 million euros higher than
the amount recorded in the previous year, due,
among others, to the higher income generated by
the structuring and setting up of operations, and
on the other hand, to the evolution of
commissions associated with the management and
distribution of assets that were 3 million euros
above the amount recognised in 2021, mainly
reflecting the evolution of the activity of
distributing third-party investment funds.
In the international activity, net commissions
totalled 211 million euros at the end of 2022,
standing 1.0% below the 213 million euros posted
in 2021. Despite the small change in net
commissions in the international activity, it should
be noted that it results from offsetting evolutions,
with the increase in the operation in Mozambique
being completely offset by the reduction occurred
in the Polish subsidiary. In both geographies, the
recorded evolution was amplified by the exchange
rate evolution of the respective currencies against
the euro.
In the Polish subsidiary, the increase in bank
commissions was not enough to offset the drop in
market-related commissions, particularly with
regard to assets management and distribution,
while the increase in the subsidiary in
Mozambique, in turn, was due to of the
performance of bank commissions, with
commissions related to the markets assuming a
materially irrelevant amount in this context.
Commissions related to the banking business and
commissions related to the markets, in the
international activity, thus evolved, in the last
year, from 183 million euros, to 192 million euros
and from 31 million euros to 20 million euros,
respectively .
NET COMMISSIONS
International activity
Million euros

2022 REPORT & ACCOUNTS |

|63
NET COMMISSIONS

Million euros
| 2022 | 2021 | 2020 restated | Chg. 22/21
BANKING COMMISSIONS |  |  |  |
Cards and transfers | 220 | 182 | 159 | 21.1%
Credit and guarantees | 144 | 155 | 148 | -6.8%
Bancassurance | 119 | 116 | 118 | 2.8%
Management and maintenance of accounts | 165 | 149 | 131 | 11.4%
Other commissions | 15 | 13 | 13 | 12.5%
SUBTOTAL | 665 | 615 | 570 | 8.1%
MARKET RELATED COMMISSIONS |  |  |  |
Securities | 39 | 37 | 44 | 6.0%
Asset management and distribution | 68 | 76 | 63 | -10.3%
SUBTOTAL | 107 | 113 | 107 | -5.0%
TOTAL NET COMMISSIONS | 772 | 728 | 677 | 6.1%
of which: |  |  |  |
Activity in Portugal | 561 | 514 | 482 | 9.0%
International activity | 211 | 213 | 195 | -1.0%

NET TRADING INCOME
Net trading income includes results from financial
operations at fair value through profit or loss,
results from foreign exchange, results from hedge
accounting operations, results from derecognition
of financial assets and financial liabilities
measured at amortised cost and results from
derecognition of financial assets measured at fair
value through other comprehensive income.
In 2022, net trading income amounted to 50
million euros, standing 42.3% below the 87 million
euros reached in the previous year. This evolution
was determined by the performance of the
international activity, though in the activity in
Portugal net trading income was also lower than
in 2021.
NET TRADING INCOME
Million euros
In the activity in Portugal, net trading income
stood at 69 million euros in 2022, showing an 8.4%
drop from the 76 million euros recorded in the
previous year.
This evolution was mainly influenced by lower
results associated with Portuguese sovereign debt
securities compared to the previous year.
On the other hand, the gains recognised in 2022,
arising from the revaluation of corporate
restructuring funds, despite not being very
significant, contributed largely to the evolution of
net trading income in the activity in Portugal,
insofar as they contrast with the costs that were
reflected in the previous year. In this regard, it
should be noted that, as communicated to the
market on 9 January, 2023, in addition to the
announcement of 29 December, 2022, Project
Crow, relating to the sale of Participating Units in
Fundo de Recuperação Turismo, Fundo de Capital
de Risco and FLIT-PTREL-SIF, SCA, as well as
others assets in the hotel sector, was completed.

| 2022 REPORT & ACCOUNTS

64 |
Regarding the international activity, net trading
income went from a positive amount of 11 million
euros in 2021, to a negative amount of 19 million
euros at the end of December 2022. This evolution
was determined by the performance of the Polish
subsidiary, having been slightly offset by the
increase recorded in the Mozambican operation.
In the Polish subsidiary, the drop in income
recognised from the revaluation of Visa shares was
of particular importance, with income from the
loan portfolio mandatorily classified at fair value
through profit or loss also recording a drop in
relation to the amount accounted for in the
previous year.
Costs with foreign exchange operations, in turn,
were higher than in the previous year, partly
influenced by the increase in costs incurred in
converting mortgage loans granted in Swiss francs,
following the agreements closed with customers,
which in 2022 penalised net trading income by 82
million euros, compared to 78 million euros
recognised in 2021.
At the subsidiary in Mozambique, there was a
favourable evolution of net trading income,
determined by the increase in income from
foreign exchange operations carried out with
customers and by the exchange rate evolution of
the Metical against the euro.
NET TRADING INCOME

Million euros
| 2022 | 2021 | 2020 restated | Chg. 22/21
Net gains / (losses) from financial operations at fair value through profit or loss | 27 | 0 | (17) | >200%
Net gains / (losses) from foreign exchange | 19 | 17 | 88 | 10.8%
Net gains / (losses) from hedge accounting operations | (2) | 4 | (2) | -152.1%
Net gains / (losses) from derecognition of assets and financial liabilities measured at amortised cost | 19 | (4) | (28) | >200%
Net gains / (losses) from derecognition of financial assets measured at fair value through other comprehensive income | (13) | 69 | 100 | -119.5%
TOTAL | 50 | 87 | 141 | -42.3%
of which: |  |  |  |
Activity in Portugal | 69 | 76 | 61 | -8.4%
International activity | (19) | 11 | 79 | <-200%

OTHER NET OPERATING INCOME
Other net operating income includes other operating income, net of other operating costs, which includes,
among others, the costs associated with the resolution and the deposit guarantee funds as well as with the
other mandatory contributions, both in the activity in Portugal and in the international activity. In addition,
other net operating income also includes the results from the sale of subsidiaries and other assets.
In 2022, other net operating income stood at a negative amount of 183 million euros, compared to an also
negative amount of 126 million euros posted in the previous year. This evolution is heavily influenced by
the increase in costs with mandatory contributions, both in the activity in Portugal and mainly in the
international activity.
In the activity in Portugal, other net operating income went from a negative amount of 66 million euros in
2021, to an also negative amount of 76 million euros at the end of 2022, penalised, as mentioned above, by
the increase in costs with mandatory contributions.
In 2022, the global amount of costs recognised with mandatory contributions in the activity in Portugal
amounted to 91 million euros, exceeding by 11 million euros the 79 million euros recorded in the previous
year. With the exception of the supervisory fee charged by the ECB, which remained at 2 million euros, all
other contributions were higher than the amount borne in the previous year. Thus, the contribution to the
Single Resolution Fund (SRF) increased from 21 million euros in 2021 to 26 million euros in the current year,
while the contribution required for the national resolution fund rose from 17 million euros to 19 million
euros in the last year. The contribution on the banking sector, meanwhile, amounted to 37 million euros in

2022 REPORT & ACCOUNTS |

|65
2022, compared to 33 million euros posted in the previous year. The additional solidarity contribution to be
applied on the banking sector, to finance the costs of the public response to the crisis impact caused by the
COVID-19 pandemic, in turn, increased from 6 million euros to 7 million euros in the same period. The total
cost associated with mandatory contributions also includes the contribution to the deposits guarantee fund,
that amounted to 1 million euros compared to an immaterial amount posted in the previous year. It should
be noted that, in the activity in Portugal, of the total amount of costs recognised with mandatory
contributions in the current year, 62 million euros refer to contributions for national entities (56 million
euros in 2021).
Conversely, the evolution of other net operating income in the activity in Portugal benefited from the
significant increase in gains recognised with the sale of non-current assets held for sale, which more than
doubled compared to the previous year.
In the international activity, other net operating income totalled a negative amount of 107 million euros at
the end of December 2022, which compares with the also negative amount of 60 million euros recognised in
2021. This evolution was determined by the contribution of the Polish subsidiary, namely by the increase in
costs with mandatory contributions to which the subsidiary was subject and by the impacts associated with
the foreign exchange mortgage loan portfolio.
Mandatory contributions borne by the Polish operation increased by 27 million euros last year, from 94
million euros in 2021 to 121 million euros at the end of 2022. This increase was largely due to the
contribution to the Institutional Protection Scheme (IPS), which amounted to 59 million euros in 2022, non-
existent in 2021. This fund was set up with the aim of ensuring the stability of the local financial system by
ensuring the liquidity and solvency of the member banks, while serving to support situations of forced
restructuring carried out by the Bank Guarantee Fund in banks that are public companies. Thus, the Bank,
together with the other participating financial institutions, created a company that, in turn, constituted an
"aid fund" to which each bank will contribute with the equivalent of 0.4% of its deposits covered by the
local Deposit Guarantee Fund. On the other hand, following the creation of this new contribution, in 2022
Bank Millennium will only bear the costs with the deposit guarantee fund for the first quarter of the year,
which arose at 8 million euros (15 million euros in 2021). The contribution to the resolution fund, in turn,
was higher than the 11 million euros recognised in 2021, amounting to 18 million euros at the end of the
current year. Conversely, the special tax on the Polish banking sector was significantly below the 69 million
euros recorded in 2021, totalling 36 million euros at the end of 2022, reflecting the suspension of its
payment following the activation of the Recovery Plan of Bank Millennium.
With regard to the impacts associated with the foreign exchange mortgage loan portfolio, the evolution of
other net operating income reflects, on the one hand, the increase of 10 million euros arising from court
costs related to the claim processes filed by Bank Millennium, which are mainly aimed at claiming the costs
associated with the use of capital, by customers, during the period of the respective loans, and on the
other hand, the reduction of 11 million euros in income to be reimbursed from a third party, as
compensation for costs incurred with the booking of provisions to address the legal risk implicit in foreign
exchange mortgage loans, following the indemnity clauses and contractual guarantees provided for in the
acquisition contract of Euro Bank S.A.
In the operation in Mozambique, although less material, there was a drop in other net operating income
compared to 2021, which was, however, offset by the effect of the exchange rate evolution of the Metical
against the euro.
EQUITY ACCOUNTED EARNINGS
Equity accounted earnings from associates, include the results appropriated by the Group related to the
entities where, despite exercising some influence, it does not have control over their financial and
operating policies.
In 2022, equity accounted earnings evolved favourably from 57 million euros in 2021 to 69 million euros on
December 2022, mainly reflecting the performance of the activity in Portugal. In the international activity,
equity accounted earnings also improved compared to those recorded in the previous year, although on a
smaller scale.
In the activity in Portugal, equity accounted earnings stood at 68 million euros in 2022, standing 16.3%
above the 58 million euros posted in the previous year. In this sense, it is important to highlight the
increase in income generated by the participation in Unicre, as well as the greater contribution, in 2022, of
the participation in Millenniumbcp Ageas.

| 2022 REPORT & ACCOUNTS

66 |
In the international activity, in turn, equity accounted earnings evolved from a negative amount of 1 million
euros in 2021 to a positive amount of 1 million euros at the end of the current year. Decisive for this
evolution was the appropriation of the results generated by Seguradora Internacional de Moçambique, S.A.
(“SIM”), now designated Fidelidade Moçambique - Companhia de Seguros S.A., in the amount of 2 million
euros following the sale at the end of 2021 by BIM – Banco Internacional de Moçambique, S.A. ("BIM") to
Fidelidade – Companhia de Seguros, S.A., of 70% of SIM's share capital and voting rights, keeping BIM
approximately 22% of its share capital. The results generated by Banco Millennium Atlântico in Angola did
not have a material impact on the evolution of this item.
EQUITY ACCOUNTED EARNINGS

| Million euros
| 2022 | 2021 | 2020 restated | Chg. 22/21
Millenniumbcp Ageas Grupo Segurador, SGPS, S.A. | 40 | 38 | 44 | 4.2%
UNICRE - Instituição Financeira de Crédito, S.A. | 12 | 5 | 6 | 135.5%
Banco Millennium Atlântico, S.A. | (1) | (1) | 9 | 33.6%
Banque BCP, S.A.S. | 5 | 4 | 3 | 13.6%
SIBS, SGPS, S.A. | 12 | 11 | 5 | 2.6%
Other (1) | 2 | — | — | >200%
TOTAL | 69 | 57 | 68 | 20.7%

(1) In 2022, it essentially includes the appropriation of the results generated by Fidelidade Moçambique - Companhia de Seguros S.A.
OPERATING COSTS
Operating costs include staff costs, other
administrative costs and depreciation.
In 2022, operating costs, excluding the effect of
specific items 6, totalled 1,057 million euros,
standing 3.1% above the 1,025 million euros
recorded in the previous year. Notwithstanding
the disciplined management of costs and the
commitment of the Group on improving
efficiency, this evolution was strongly influenced
by the rise in inflation that occurred across all
geographies in which the Bank operates.
In this sense, it should be noted that the
performance of operating costs of the Group,
excluding specific items 6, was determined by the
increase in other administrative costs, particularly
significant in the international activity, even
though the activity in Portugal also recorded an
increase compared to the amount accounted for
in the previous year.
Although, in consolidated terms, staff costs,
excluding specific items 6, remained in line with
the amount posted in 2021, there were different
dynamics with regard to their evolution, insofar as
the savings achieved in the activity in Portugal
were fully offset by the increase recorded in the
operations abroad.
Although on a much smaller scale, the increase in
depreciations in the international activity more
than offset the reduction achieved in the activity
in Portugal, with this item not having materially
influenced the evolution of operating costs in
consolidated terms.

2022 REPORT & ACCOUNTS |

|67
6 Negative impact of 16 million euros in 2022 and 91 million euros in 2021.
In 2022, specific items included: i) the distribution of part of the results obtained by the Bank in 2021 by its employees, as approved at the General Meeting of Banco Comercial
Português, SA, held on 4 May, 2022; ii) the recognition of a provision for other structure adaptation measures; iii) costs with mortgage financing to former employees; and iv)
discretionary remuneration paid to employees as a measure to offset the impacts of inflation. In 2021, specific items are mainly related to the costs arising from the adjustment
of headcount carried out by the Bank that year, including a provision in the amount of 84 million euros.
OPERATING COSTS
Million euros
In the activity in Portugal, the evolution of
operating costs, not considering the effect of
specific items 6, from 602 million euros in 2021 to
585 million euros in 2022, was determined by the
reduction in staff costs, resulting from the
implementation of the headcount adjustment plan
that the Bank carried out in 2021. It should be
noted that the costs resulting from the said
headcount adjustment, among which the
recognition of a provision, in the amount of 84
million euros, were recognised as specific items in
2021. Operating costs in the activity in Portugal
were also influenced, although to a lesser extent,
by the increase in other administrative costs, with
emphasis on the increase in energy-related costs
and the impacts of the high inflation that
characterised the year 2022.
OPERATING COSTS
Activity in Portugal
Million euros
In the international activity, operating costs
totalled 471 million euros at the end of 2022,
standing 11.5% above the 423 million euros
accounted in 2021. This evolution was due to the
performance of both the Polish subsidiary and the
subsidiary in Mozambique, in both cases,
reflecting the inflationary increases recorded in
these geographies, in recent months.
OPERATING COSTS
International activity
Million euros
In the Polish subsidiary, the increase in operating
costs resulted from the evolution of staff costs
and other administrative costs, with depreciation
remaining at a similar level to that of the previous
year. Despite the need to continue improving
efficiency and the consequent reduction in the
number of employees and branches compared to
the previous year, the evolution of operating costs
in the Polish subsidiary was influenced by the
strong pressure on basic wages, resulting both
from the rising levels of inflation and from the
characteristics of the Polish labour market,
namely the very low unemployment rates in the
country. In this sense, as a way of retaining and
motivating employees, the amounts allocated to
bonus paid to employees were also higher than in
2021.
In turn, operating costs, in the operation in
Mozambique were also higher than in 2021, driven
by the increase in staff costs, other administrative
costs and depreciation. This evolution, in addition
to the impact of the rise in inflation, is also
influenced by the effect of the exchange rate
evolution of the Metical against the euro.

| 2022 REPORT & ACCOUNTS

68 |
In consolidated terms, despite higher operating
costs, excluding specific items 6, compared to the
amount accounted for in 2021, cost to income and
cost to core income ratios showed a significant
improvement, benefiting from the favourable
evolution of both net operating revenues and core
income, respectively. Thus, excluding specific
items, the cost to income ratio of the Group went
from 43.9% in 2021 to 36.8% in 2022, while cost to
core income ratio stood at 36.2%, considerably
below the 44.2% recorded in the previous year.
Cost to income and cost to core income stated
ratios evolved, respectively, from 47.8% to 37.4%
and from 48.2% to 36.7% in the same period.
In the activity in Portugal, the cost to income
ratio and the cost to core income ratio, excluding
specific items, also showed a favourable evolution
in the last year, from 42.6% to 37.0% and from
44.7% to 38.7%, respectively, reflecting, on one
hand, the reduction of operating costs and, on the
other hand, the increase in core income and net
operating revenues. Stated cost to income and
cost to core income ratios, in the activity in
Portugal, evolved, respectively, from 49.0% to
38.0% and from 51.5% to 39.8% in the same
period.
Despite the increase in operating costs, the
evolution of net operating revenues and core
income also enabled an improvement in the cost
to income and cost to core income ratios in the
international activity, which evolved from 45.9%
to 36.6% and from 43.6% to 33.4%, respectively in
the last year.
OPERATING COSTS

Million euros
| 2022 | 2021 | 2020 restated | Chg. 22/21
ACTIVITY IN PORTUGAL (1) |  |  |  |
Staff costs | 322 | 346 | 364 | -6.8%
Other administrative costs | 184 | 176 | 178 | 4.3%
Depreciation | 79 | 80 | 76 | -1.5%
| 585 | 602 | 619 | -2.8%
INTERNATIONAL ACTIVITY (1) |  |  |  |
Staff costs | 242 | 218 | 220 | 11.1%
Other administrative costs | 169 | 148 | 146 | 14.3%
Depreciation | 60 | 57 | 59 | 5.8%
| 471 | 423 | 425 | 11.5%
CONSOLIDATED (1) |  |  |  |
Staff costs | 564 | 564 | 584 | 0.1%
Other administrative costs | 353 | 324 | 325 | 8.9%
Depreciation | 139 | 137 | 135 | 1.5%
| 1,057 | 1,025 | 1,044 | 3.1%
SPECIFIC ITEMS | 16 | 91 | 46 | -81.8%
TOTAL | 1,073 | 1,116 | 1,090 | -3.8%

(1) Excludes the impact of specific items previously mentioned.

2022 REPORT & ACCOUNTS |

|69
STAFF COSTS
Staff costs,not considering the effect of specific
items (16 million euros in 2022 and 91 million
euros in 2021), remained in line with the amount
recorded in the previous year, totalling 564
million euros at the end of 2022.
The specific items mentioned above were, in both
years, fully recognised in the activity in Portugal.
In 2022, specific items include: i) the distribution
of part of the results obtained by the Bank in 2021
by its employees, as approved at the General
Meeting of Banco Comercial Português, SA, held
on 4 May, 2022; ii) costs with mortgage financing
to former employees; iii) discretionary payment to
employees as a measure to offset the impacts of
inflation; and iv) the recognition of a provision for
other structure adaptation measures. On the
other hand, in 2021, the specific items were
mainly related to costs incurred with the
headcount adjustment carried out by the Bank in
that year, mainly including the impact of a
provision, in the amount of 84 million euros,
following the adjustments identified as necessary
by the Bank.
Although, in consolidated terms, staff costs,
excluding specific items, are at a similar level to
the previous year, it is important to highlight the
reduction achieved in the activity in Portugal,
whose impact was, however, fully offset by the
increase in the international activity.
In the activity in Portugal, staff costs, excluding
the impact of specific items (16 million euros in
2022 and 91 million euros in 2021), amounted to
322 million euros at the end of 2022, showing a
6.8% reduction from the 346 million euros posted
in the previous year.
The favourable evolution of staff costs in the
activity in Portugal, excluding the impact of
specific items, was mainly due to the impact of
the reduction, in net terms, in the number of
employees, reflecting the impact arising from the
implementation of the headcount adjustment
plan. In this sense, it should be noted that, during
the year 2021, the Bank reduced its number of
employees in the activity in Portugal by 724
employees, most of whom during the second half
of the year, having ended the year with 6,289
employees. On 31 December, 2022, the number of
employees assigned to the activity in Portugal was
6,252.
The costs arising from the headcount adjustment
were recognised in 2021, as specific items, with
the aforementioned provision, in the amount of 84
million euros, being the most significant item.
In the international activity, staff costs amounted
to 242 million euros in 2022, standing 11.1% above
the 218 million euros recorded in the previous year.
The Polish subsidiary was mainly responsible for
this evolution, although the subsidiary in
Mozambique also saw an increase in staff costs
compared to the previous year.
In the Polish subsidiary, the evolution of staff
costs continued to be determined by the strong
pressure on basic wages, resulting both from rising
levels of inflation and from the characteristics of
the Polish labour market, in particular from the
very low unemployment rates verified in the
country. In this sense, as a way of retaining and
motivating employees, the amounts allocated to
bonus paid to employees was also higher than in
2021. Conversely, the challenging context that the
subsidiary has been facing dictated the need to
continue to improve efficiency. In this sense,
there was a progressive reduction in the total
number of employees, from 7,079 employees
(6,942 FTE - full-time equivalent) at the end of
2021, to 6,987 employees (6,860 FTE - full-time
equivalent) on 31 December, 2022, which had a
positive impact on the evolution of the staff costs
of the subsidiary and, consequently, on the
international activity.
The operation in Mozambique, in turn, despite
having maintained its number of employees stable,
with 2,504 employees on 31 December, 2022 (2,496
employees a year earlier), also showed an increase
in staff costs compared to the previous year,
justified by both the salary update and, above all,
by the exchange rate evolution of the Metical
against the euro.
EMPLOYEES

| 2022 REPORT & ACCOUNTS

70 |
STAFF COSTS

Million euros
| 2022 | 2021 | 2020 restated | Chg. 22/21
Salaries and remunerations | 462 | 455 | 478 | 1.4%
Social security charges and other staff costs | 103 | 108 | 106 | -5.3%
TOTAL EXCLUDING SPECIFIC ITEMS | 564 | 564 | 584 | 0.1%
of which: |  |  |  |
Activity in Portugal | 322 | 346 | 364 | -6.8%
International activity | 242 | 218 | 220 | 11.1%
SPECIFIC ITEMS | 16 | 91 | 41 | -81.8%
TOTAL | 581 | 654 | 625 | -11.2%

OTHER ADMINISTRATIVE COSTS
Other administrative costs in 2022 were strongly
influenced by the increase in inflation, having
evolved from 324 million euros in 2021 to 353
million euros at the end of 2022. The increase of
8.9% in consolidated terms was essentially due to
the performance of the international activity,
despite the fact that other administrative costs in
the activity in Portugal were also higher than in
the previous year.
In the activity in Portugal, other administrative
costs amounted to 184 million euros in 2022,
standing 4.3% above the 176 million euros
recorded in 2021. This performance was mainly
due to the increase, greater than 60%, in costs
related to water, energy and fuels, mainly
reflecting the increased cost of energy.
Additionally, the greater investment by the Bank
in technology and cybersecurity led to an increase
in the respective costs namely associated to the
maintenance of hardware and software, reflected
under Information technology services and
Maintenance and related services.
On the other hand, the increasingly digital
servicing model, with the increasing transfer of
transactions to machines, resulted in the growth
of the number of deposit machines installed in
branches, which, along with the inclusion of a
greater number of branches in the deposit
centralisation service was reflected in the
increase in costs associated with the transport of
values (reflected under transportation item),
despite the fact that the cost per transaction has
decreased.
At the same time, the favourable evolution of the
pandemic associated with COVID-19 and the
consequent gradual recovery of economic activity
had an impact on the performance of other
administrative costs. As such, it should be noted,
on the one hand, the increase in costs incurred
with advisory services, travel, hotel and
representations, rents and leases and
sponsorships, and on the other, the favourable
performance of other supplies and services,
independent labour and communications, related
to remote work. In this sense, reference should be
made to the reduction in judicial recovery
activity, due to the reduction in lawsuits and Non-
performing exposures (NPE), with a considerable
impact on expenses associated with law firms.
Finally, it should also be noted that the Bank has
pursued a disciplined cost management,
implementing a series of measures in this regard.
Among the aforementioned measures, emphasis
should be given to the resizing of the branches
network in the activity in Portugal, which
decreased from 434 branches at the end of 2021,
to 408 branches on 31 December 2022, with
positive impact on the several items of other
administrative costs, along with a series of
recurring initiatives aimed at optimising the cost
structure of the Bank.
In the international activity, other administrative
costs amounted to 169 million euros in 2022,
representing a 14.3% increase from the 148 million
euros posted in the previous year, largely
reflecting the aforementioned general price
increase. This evolution was due to the
performance of both the Polish subsidiary, and the
subsidiary in Mozambique with the latter
reflecting also the evolution of the Metical against
the euro.
On the other hand, it should be noted that the
evolution of other administrative costs, in the
international activity, continues to benefit from
the synergies obtained as a result of the
optimisation of the branch network verified
mainly in the Polish subsidiary whose number
decreased from the 655 branches existing at the
end of December 2021, to 635 branches on 31
December 2022. The subsidiary in Mozambique, in

2022 REPORT & ACCOUNTS |

|71
turn, ended 2022 with 197 branches, two fewer
than at the end of the previous year.
BRANCHES
OTHER ADMINISTRATIVE COSTS

Million euros
| 2022 | 2021 | 2020 restated | Chg. 22/21
Water, electricity and fuel | 18 | 13 | 14 | 41.8%
Consumables | 8 | 6 | 9 | 17.1%
Rents and Leases | 31 | 29 | 29 | 7.0%
Communications | 24 | 22 | 26 | 12.8%
Travel, hotel and representation costs | 5 | 3 | 4 | 93.1%
Advertising | 25 | 24 | 23 | 2.1%
Maintenance and related services | 18 | 15 | 16 | 17.9%
Credit cards and mortgage | 9 | 8 | 8 | 7.1%
Advisory services | 32 | 27 | 22 | 18.5%
Information technology services | 35 | 35 | 36 | 2.1%
Outsourcing and independent labour | 77 | 77 | 75 | 0.0%
Other specialised services | 29 | 28 | 26 | 5.0%
Training costs | 1 | 1 | 1 | 13.3%
Insurance | 5 | 5 | 5 | -0.6%
Legal expenses | 4 | 5 | 3 | -3.7%
Transportation | 10 | 8 | 9 | 24.1%
Other supplies and services | 21 | 19 | 19 | 12.2%
TOTAL EXCLUDING SPECIFIC ITEMS | 353 | 324 | 325 | 8.9%
of which: |  |  |  |
Activity in Portugal | 184 | 176 | 178 | 4.3%
International activity | 169 | 148 | 146 | 14.3%
SPECIFIC ITEMS | — | — | 5 |
TOTAL | 353 | 324 | 330 | 8.9%

(1) In 2020, some of the amounts recorded as “Information technology services”, started to be accounted as “Rents and Leases”, in order
to improve the quality of the information reported. The historical amounts of such items regarding 2020 and 2021 included in this analysis,
are presented considering these reclassifications with the purpose of ensuring their comparability, therefore diverging from the accounting
values disclosed.

| 2022 REPORT & ACCOUNTS

72 |
DEPRECIATIONS
Depreciations amounted to 139 million euros in 2022, standing slightly above (+1.5%) the amount recorded
in the previous year. Although, in consolidated terms, depreciations remained at a similar level to that of
the previous year, there were evolutions in opposite directions, with the reduction in the activity in
Portugal being fully offset by the increase in the international activity.
In the activity in Portugal, depreciations stood at 79 million euros at the end of the current year, slightly
below (1.5%) the amount posted in 2021, despite the increased investment concentrated in software and IT
equipment, given the Bank's commitment to the digital transformation process.
In the international activity, depreciations amounted to 60 million euros in 2022, standing 5.8% above the
57 million euros recorded in 2021. This evolution was determined by the performance of the subsidiary in
Mozambique, mainly reflecting the exchange rate evolution of the Metical against the euro, since in local
currency the amount of depreciations in this subsidiary showed a more modest growth. Inversely, the
increase in depreciations in the Polish subsidiary was offset by the impact arising from the exchange rate
evolution of the Zloty against the euro, assuming an immaterial value.
RESULTS ON MODIFICATION
Results on modification, non-existent in 2021, totalled a negative amount of 310 million euros in 2022.
The amount recognised in results on modification, in 2022, results mainly from the reclassification, in the
fourth quarter of the year, of the amount associated to potential costs arising from the moratorium
program in Poland (credit holidays), enacted by the President of the Republic of Poland in July of the same
year, which was accounted for in other impairments and provisions. This item also started to include
contractual modifications, in accordance with IFRS9, namely those negotiated with customers with
exchange mortgage loans. The amounts referring to 2021, given its immateriality in this context, were not
restated.
In this context, it should be noted that, following the signing by the President of the Republic of Poland of
the Act of 7 July, 2022 on crowdfunding for business ventures and assistance to borrowers, introducing,
among others, access to moratoria (credit holidays) of up to eight months in 2022-2023 for borrowers of
mortgage loans denominated in Zlotys, the Bank estimated the maximum impact of the implementation of
this Act if all eligible borrowers were to use this instrument, having recognised an upfront cost of 80% of
the respective costs in the results of the third quarter of 2022, corresponding to 305 million euros. In the
fourth quarter of 2022, a review was carried out of the effective cost and use of credit moratoriums by
eligible borrowers in the second half of 2022, and ongoing requests to suspend housing loan instalments in
Zlotys in 2023 were analysed. As a result of this review, taking into account the analysis of Customers
behavior, Bank Millennium's Group adjusted the estimates of the participation percentage to 68%. The total
estimated cost of credit moratoria was consequently reduced to 283 million euros at the end of 2022, with
a positive impact on the results for the fourth quarter of the year.
LOANS IMPAIRMENT
Impairment of loans to customers includes impairment of financial assets at amortised cost for loans
granted to customers and for debt securities associated with credit operations, net of reversals and
recoveries of credit and interest.
The reconciliation of the impairment of financial assets at amortised cost presented in the consolidated
profit and loss account with the impairment of loans to customers considered for the purposes of this
analysis is presented as follows:

2022 REPORT & ACCOUNTS |

|73
Loans impairment (P&L)

Million euros
| 2022 | 2021 | 2020 restated
Impairment of financial assets at amortised cost (accounting P&L) (1) | 301 | 353 | 513
Impairment of Loans and advances to credit institutions (at amortised cost) (2) | 0 | 1 | 0
Impairment of financial assets at amortised cost not associated with credit operations (3) | 1 | 3 | 4
Loans impairment considering management criteria (1)-(2)-(3) | 301 | 349 | 510
| 148 | 151 | 182

In 2022, impairment for loan losses (net of recoveries) totalled 301 million euros, showing a reduction of
13.8% compared to the 349 million euros accounted for in 2021, thanks to the favourable evolution
recorded in the activity in Portugal, slightly softened by the performance of the international activity.
LOANS IMPAIRMENT (NET)
Million euros
In the activity in Portugal, loans impairment
charges (net of recoveries), amounted to 218
million euros in 2022, standing 20.1% below the
273 million euros recognised in the previous year,
reflecting a better perspective of the credit
portfolio risk in relation to the previous year.
In 2022, the reinforcement of overlays, additional
impairments in relation to those estimated by the
collective impairment calculation models in force,
was lower than the amount of the previous year,
thus contributing to the favourable evolution of
loans impairment in the activity in Portugal.
Conversely, this evolution was conditioned by the
update of the macroeconomic scenarios verified in
2022.
LOANS IMPAIRMENT (NET)
Activity in Portugal
Million euros
In the international activity, impairment charges
(net of recoveries), stood 8.8% above the 76
million euros recognised in 2021, amounting to 82
million euros at the end of 2022. This evolution
was due to the higher level of provisioning
required by both the Polish and the Mozambican
subsidiaries.
The increase in loan impairment at the Polish
subsidiary partly reflects higher-than-average
defaults and overdue loans, mainly attributable to
interest rate increases from the last quarter of
2021 onwards.

| 2022 REPORT & ACCOUNTS

74 |
In the operation in Mozambique, in turn, the
evolution of loans impairment is influenced by the
reversal of the impairment associated with a
customer in 2021.
LOANS IMPAIRMENT (NET)
International activity
Million euros
The evolution of impairment charges (net of
recoveries), in consolidated terms, allowed the
cost of risk of the Group, net of recoveries, to
record a significant improvement from the 60
basis points observed in 2021, standing at 52 basis
points at the end of 2022.
The performance of the activity in Portugal was
decisive for this evolution, with the cost of risk
(net of recoveries) falling from 69 basis points in
2021 to 54 basis points in the current year.
In the international activity, in turn, the cost of
risk net of recoveries worsened, rising from 41
basis points to 47 basis points in the same period.
LOANS IMPAIRMENT (NET OF RECOVERIES)

Million euros
| 2022 | 2021 | 2020 restated | Chg. 22/21
Loan impairment charges (net of reversions) | 321 | 372 | 533 | -13.6%
Credit recoveries | 21 | 23 | 23 | -9.2%
TOTAL | 301 | 349 | 510 | -13.8%
Of which: |  |  |  |
Activity in Portugal | 218 | 273 | 354 | -20.1%
International activity | 82 | 76 | 156 | 8.8%
COST OF RISK: |  |  |  |
Impairment charges (net of recoveries) as a % of gross loans | 52 b.p. | 60 b.p. | 92 b.p. | -8 b.p.

OTHER IMPAIRMENT AND PROVISIONS
Other impairment and provisions include (i) impairment, net of reversals, for loans and advances of credit
institutions classified at amortised cost; (ii) impairment for financial assets (classified at fair value through
other comprehensive income and at amortised cost not associated with credit operations); (iii) impairment
for other assets, namely for repossessed assets, investments in associates and goodwill of subsidiaries and
(iv) other provisions.
In 2022, other impairments and provisions totalled 756 million euros, increasing 6.1% from the 712 million
euros recorded in 2021, mainly due to the performance of the activity in Portugal.
Other impairments and provisions, in the activity in Portugal, amounted to 205 million euros at the end of
2022, showing an increase of 24.1% compared to the 165 million euros recognised in the previous year. This
evolution reflects, to a large extent, the higher level of provisioning required by other assets, particularly
with regard to non-current assets held for sale, namely the foreclosed assets portfolio, reflecting the
application of more conservative valuation assumptions, despite the significant portfolio reduction recorded

2022 REPORT & ACCOUNTS |

|75
in 2022. At the same time, there was also an increase of 24 million euros in provisions, mainly reflecting the
evolution of provisions booked for others risks. Although with a less material impact, provisions for tax
contingencies also grew compared to 2021, in the same order of magnitude as the reduction in provisions for
guarantees and other commitments.
In the international activity, other impairment and provisions amounted to 550 million euros at December
2022, in line (+0.6%) to the amount calculated in the previous year.
Although the overall amount of other impairments and provisions in the international activity has remained
stable compared to 2021, this performance stems from different performances that offset each other.
In this regard, it should be noted that notwithstanding the good operating performance of Bank Millennium
S.A., the expected effect that the increase in reference interest rates has on the prospective evolution of
net interest income and the fact that Bank Millennium S.A. continues to assess the goodwill associated with
the consumer credit business acquired from Euro Bank S.A. as recoverable, given the sensitivity of the
estimated value to the main assumptions considered and the uncertainty associated with the material
impacts on the Business Plan and projections arising from potential legislative measures, the Bank has
considered the total impairment of the goodwill associated with the acquisition by the BCP Group of the
percentage of control over Bank Millennium S.A. in the amount of 102 million euros as at 30 June 2022.
In contrast, despite continuing to strongly penalise the result of the Polish subsidiary, the reinforcement of
the extraordinary provision, booked to address the foreign exchange mortgage legal risk, evolved favourably
from the 505 million euros recognised in 2021, to 431 million euros at the end of December of the current
year. In both years, the impact of these provisions has been partially offset by the recognition of income,
reflected under the heading of other net operating income, corresponding to the amount to be received from
a third party, following the indemnity clauses and contractual guarantees clauses provided for in the
acquisition contract of Euro Bank S.A. (48 million euros in 2021 and 37 million euros in 2022). The remaining
provisions for others risks recognised in the Polish subsidiary were also lower compared to the amount posted
in 2021.
Additionally, the performance of other impairments and provisions in the international activity also
benefited, albeit to a lesser extent, both from the lower impairments recognised in respect of the
investment in Banco Millennium Atlântico, that evolved from 10 million euros at the end of 2021, to 6
million euros (including the impairment for goodwill) in 2022.
In the subsidiary in Mozambique, other impairments and provisions also evolved favourably, from 10 million
euros in 2021 to 7 million euros in 2022, largely due to a provision for the property of the former head
office of BIM - Banco International of Mozambique, S.A. booked in the previous year.
INCOME TAX
Income tax (current and deferred) amounted to 304 million euros in 2022, which compares to 204 million
euros obtained in the previous year.
The recognised taxes include, in 2022, current tax of 110 million euros (81 million euros in 2021) and
deferred tax of 195 million euros (122 million euros in 2021).
Current tax expenses in 2022 were strongly influenced by provisions for legal risks related to the portfolio of
foreign currency mortgage loans and by mandatory contributions to the banking sector, both of them non-
deductible for tax purposes in the Polish subsidiary.
Deferred tax expenses in 2022 mainly result from the income of the period of the activity in Portugal and are
influenced by some mandatory contributions to the banking sector in Portugal non-deductible for tax
purposes.
The Group income before tax includes the expense of 102 million euros related to the impairment of the
goodwill of the Polish subsidiary, which has no impact on current and deferred taxes.

| 2022 REPORT & ACCOUNTS

76 |
NON-CONTROLLING INTERESTS
Non-controlling interests are the part attributable to third parties of the net income of the subsidiary
companies consolidated under the full method in which the Group Banco Comercial Português does not
hold, directly or indirectly, the entirety of their share capital.
Non-controlling interests record mainly the income for the year attributable to third parties related to the
shareholdings in Bank Millennium in Poland (49.9%) and in Millennium bim in Mozambique (33.3%).
In 2022, non-controlling interests totalled a negative amount of 78 million euros, which compares with an
also negative amount of 113 million euros in the previous year. This evolution was mainly a result of the
income for the year attributable to third parties via the consolidation of the Polish subsidiary, which
recorded a decline of 38 million euros in that period (from a negative amount of 146 million euros in 2021,
to an also negative amount of 108 million euros in 2022), reflecting the decrease in losses reported by Bank
Millennium in 2022.
On the other hand, income for the year attributable to third parties via the consolidation of the subsidiary
in Mozambique in 2022, stood at 35 million euros, 3 million euros above the 32 million euros recorded in the
previous year.

2022 REPORT & ACCOUNTS |

|77
REVIEW OF THE BALANCE SHEET
Following the entrance into force of the IFRS 9 – Financial Instruments on January 1, 2018 and the
consequent impacts on the structure of the financial statements of Millennium bcp versus previous periods,
some indicators were defined based on concepts that translate the management criteria adopted by the
Group within the scope of preparation of financial information. The correspondence between the
management approaches and the accounting information is described in the glossary and throughout the
document, when applicable, especially the concepts related with loans to customers, balance sheet
customer funds and the securities portfolio.
BALANCE SHEET AS AT 31 DECEMBER

Million euros
| 2022 | 2021 | 2020 restated | Chg. 22/21
ASSETS |  |  |  |
Cash and deposits at central banks and demand deposits at credit institutions (1) | 6,235 | 8,158 | 5,566 | -23.6 %
Financial assets measured at amortised cost |  |  |  |
Loans and advances to credit institutions | 963 | 453 | 1,015 | 112.6%
Loans and advances to customers | 54,676 | 54,972 | 52,022 | -0.5%
Debt instruments | 13,036 | 8,205 | 6,235 | 58.9%
Financial assets measured at fair value through profit or loss |  |  |  |
Financial assets held for trading | 767 | 931 | 1,031 | -17.7%
Financial assets not held for trading mandatorily at fair value through profit or loss | 553 | 991 | 1,315 | -44.2%
Financial assets measured at fair value through other comprehensive income | 7,462 | 12,891 | 12,140 | -42.1%
Investments in associated companies | 299 | 462 | 435 | -35.4%
Non-current assets held for sale | 499 | 781 | 1,026 | -36.1%
Other tangible assets, goodwill and intangible assets | 757 | 857 | 887 | -11.6%
Current and deferred tax assets | 2,957 | 2,705 | 2,645 | 9.3%
Other (2) | 1,657 | 1,497 | 1,396 | 10.7%
TOTAL ASSETS | 89,861 | 92,905 | 85,715 | -3.3%
LIABILITIES |  |  |  |
Financial liabilities measured at amortised cost |  |  |  |
Resources from credit institutions | 1,468 | 8,896 | 8,899 | -83.5%
Resources from customers | 75,430 | 69,560 | 63,001 | 8.4%
Non subordinated debt securities issued | 1,482 | 2,188 | 1,389 | -32.3%
Subordinated debt | 1,333 | 1,395 | 1,405 | -4.4%
Financial liabilities at fair value through profit or loss |  |  |  |
Financial liabilities held for trading | 242 | 231 | 279 | 4.4%
Financial liabilities measured at fair value through profit or loss | 1,818 | 1,582 | 1,599 | 14.9%
Other (3) | 2,167 | 1,990 | 1,757 | 8.9%
TOTAL LIABILITIES | 83,940 | 85,843 | 78,329 | -2.2%
EQUITY |  |  |  |
Share capital | 3,000 | 4,725 | 4,725 | -36.5%
Share premium | 16 | 16 | 16 |
Other equity instruments | 400 | 400 | 400 |
Treasury shares | 0 | 0 | (0) |
Reserves and retained earnings (4) | 1,514 | 840 | 897 | 80.3%
Net income for the period attributable to Bank's Shareholders | 207 | 138 | 183 | 50.3%
TOTAL EQUITY ATTRIBUTABLE TO BANK'S SHAREHOLDERS | 5,138 | 6,119 | 6,221 | -16.0%
Non-controlling interests | 782 | 943 | 1,165 | -17.0%
TOTAL EQUITY | 5,921 | 7,062 | 7,386 | -16.2%
TOTAL LIABILITIES AND EQUITY | 89,861 | 92,905 | 85,715 | -3.3%

(1)Includes Cash and deposits at Central Banks and demand deposits at credit institutions.
(2)Includes Assets with repurchase agreement (when applicable), Hedging derivatives, Investment property and Other assets.
(3)Includes Hedging derivatives, Provisions, Current and deferred income tax liabilities and Other liabilities.
(4)Includes Legal and statutory reserves and Reserves and retained earnings.

| 2022 REPORT & ACCOUNTS

78 |
The reconciliation between the management criteria defined and the accounting values published in the
consolidated financial statements are presented below.
Loans to customers (gross) includes loans to customers at amortised cost before impairment, the debt
securities at amortised cost associated with credit operations before impairment and loans to customers at
fair value through profit or loss before fair value adjustments. The amount of balance sheet impairment
considered for the purpose of calculating loans to customers (net) and the coverage ratio of the loan
portfolio includes the balance sheet impairment associated with loans to customers at amortised cost, the
balance sheet impairment related with debt securities at amortised cost associated with credit operations
and the fair value adjustments associated with loans to customers at fair value through profit or loss.
Loans to customers

Million euros
| 2022 | 2021 | 2020
Loans to customers at amortised cost (accounting Balance Sheet) | 54,676 | 54,972 | 52,022
Debt instruments at amortised cost associated to credit operations | 1,501 | 1,308 | 1,598
Balance sheet amount of loans to customers at fair value through profit or loss | 21 | 79 | 354
Loan to customers (net) considering management criteria | 56,198 | 56,360 | 53,975
Balance sheet impairment related to loans to customers at amortised cost | 1,502 | 1,849 | 2,037
Balance sheet impairment associated with debt instruments at amortised cost related to credit operations | 5 | 7 | 11
Fair value adjustments related to loans to customers at fair value through profit or loss | 8 | 14 | 26
Loan to customers (gross) considering management criteria | 57,713 | 58,231 | 56,048

2022 REPORT & ACCOUNTS |

|79
Regarding deposits and other resources from customers, the Bank continued to use the approach previously
used for the item “Resources from customers and other loans”, aggregating resources from customers at
amortised cost and customer deposits at fair value through profit and loss (non-existent on 31 December
2021). Balance sheet customer funds include, apart from deposits and other resources from customers, debt
securities placed with customers either classified at amortised cost or designated at fair value through
profit or loss.
Balance sheet customer funds

|  | Million euros
| 2022 | 2021 | 2020
Financial liabilities at fair value through profit or loss (accounting Balance sheet) (1) | 1,818 | 1,582 | 1,599
Debt securities at fair value through profit or loss and certificates (2) | 1,341 | 1,582 | 1,341
Customer deposits at fair value through profit or loss considering management criteria (3) = (1) - (2) | 477 | — | 259
Resources from customers at amortised cost (accounting Balance sheet) (4) | 75,430 | 69,560 | 63,001
Deposits and other resources from customers considering management criteria (5) =(3) + (4) | 75,907 | 69,560 | 63,259
Non subordinated debt securities issued at amortised cost (accounting Balance sheet) (6) | 1,482 | 2,188 | 1,389
Debt securities at fair value through profit or loss and certificates (7) | 1,341 | 1,582 | 1,341
Non subordinated debt securities placed with institucional customers (8) | 1,480 | 2,155 | 1,225
Debt securities placed with customers considering management criteria (9) = (6) + (7) - (8) | 1,343 | 1,615 | 1,505
Balance sheet customer funds considering management criteria (10) = (5) + (9) | 77,250 | 71,175 | 64,764

| 2022 REPORT & ACCOUNTS

80 |
The securities portfolio includes debt securities at amortised cost not associated with credit operations (net
of impairment), financial assets at fair value through profit or loss (excluding amounts related to credit
operations and trading derivatives), financial assets at fair value through other comprehensive income.
Securities portfolio

|  | Million euros
| 2022 | 2021 | 2020
Debt instruments at amortised cost (accounting Balance sheet) (1) | 13,036 | 8,205 | 6,235
Debt instruments at amortised cost associated to credit operations net of impairment (2) | 1,501 | 1,308 | 1,598
Debt instruments at amortised cost considering management criteria (3) = (1) - (2) | 11,535 | 6,897 | 4,637
Financial assets not held for trading mandatorily at fair value through profit or loss (accounting Balance sheet) (4) | 553 | 991 | 1,315
Balance sheet amount of loans to customers at fair value through profit or loss (5) | 21 | 79 | 354
Financial assets not held for trading mandatorily at fair value through profit or loss considering management criteria (6) = (4) - (5) | 532 | 912 | 961
Financial assets held for trading (accounting Balance sheet) (7) | 767 | 931 | 1,031
of which: trading derivatives (8) | 376 | 431 | 544
Financial assets at fair value through other comprehensive income (accounting Balance sheet) (9) | 7,462 | 12,891 | 12,140
Securities portfolio considering management criteria (10) = (3)+(6)+(7)-(8)+(9) | 19,918 | 21,201 | 18,226

2022 was characterised by a reduction in
Millennium bcp’s consolidated balance sheet,
observed in the activity in Portugal, which is
mainly due to the early repayment of the bulk of
the financing that had been obtained from the
European Central Bank within the scope of
targeted longer-term refinancing operations
(TLTRO). In this context, it should be highlighted,
on the asset side, the reductions in cash and
deposits at central banks, in loans to customers
and in securities portfolio and the increase in
loans and advances to credit institutions and, on
liability side, the reductions in resources from
Central Banks and non subordinated debt
securities issued and the increase in customer
funds and other liabilities.
The dynamics of growth in deposits, together with
the reduction in loans to customers, led to a drop
of the loans-to-deposits ratio (measured by the
ratio of net loans to customers and deposits and
other resources from customer), that evolved
from 81.0% at the end of 2021, to 74.0% on 31
December 2022.
TOTAL ASSETS
Million euros
Millennium bcp’s consolidated balance sheet total
assets amounted to 89,861 million euros as of 31
December 2022, showing a 3.3% drop in
comparison with the 92,905 million euros
accounted by the end of 2021, since the increase
in total assets of the international activity was not
enough to compensate the reduction in the
activity in Portugal.

2022 REPORT & ACCOUNTS |

|81
MAIN GEOGRAPHIES

Million euros
|  |  |  | International activity *
| Portugal | Total Int Op | Bank Millennium | BIM
| Dec 22 | Dec 21 | Dec 20 | Dec 22 | Dec 21 | Dec 20 | Dec 22 | Dec 21 | Dec 20 | Dec 22 | Dec 21 | Dec 20
TOTAL ASSETS | 63,268 | 67,216 | 61,212 | 26,593 | 25,689 | 24,503 | 23,697 | 22,669 | 21,341 | 2,824 | 2,527 | 2,034
LOANS TO CUSTOMERS (GROSS) | 40,149 | 39,866 | 38,473 | 17,564 | 18,365 | 17,575 | 16,881 | 17,739 | 16,694 | 683 | 626 | 527
Mortgage loans | 19,014 | 18,394 | 17,462 | 9,110 | 9,678 | 8,901 | 9,099 | 9,668 | 8,892 | 11 | 11 | 8
Personnal loans | 2,180 | 2,111 | 2,065 | 3,862 | 3,888 | 3,723 | 3,700 | 3,752 | 3,630 | 161 | 135 | 93
Companies | 18,955 | 19,361 | 18,945 | 4,593 | 4,799 | 4,951 | 4,082 | 4,319 | 4,172 | 511 | 480 | 425
CUSTOMER FUNDS | 68,262 | 66,290 | 60,987 | 24,546 | 23,806 | 23,505 | 22,315 | 21,912 | 19,793 | 2,232 | 1,894 | 1,524
BALANCE SHEET CUSTOMER FUNDS | 54,077 | 49,319 | 44,658 | 23,173 | 21,856 | 20,106 | 20,941 | 19,962 | 17,942 | 2,232 | 1,894 | 1,524
Deposits and other resources from customers | 52,734 | 47,712 | 43,221 | 23,173 | 21,848 | 20,038 | 20,941 | 19,954 | 17,874 | 2,232 | 1,894 | 1,524
Debt securities placed with customers | 1,343 | 1,606 | 1,437 | - | 9 | 68 | - | 9 | 68 | - | - | -
OFF BALANCE SHEET CUSTOMER FUNDS | 14,185 | 16,972 | 16,329 | 1,373 | 1,950 | 3,399 | 1,373 | 1,950 | 1,852 | - | - | -
Assets under management | 4,307 | 4,629 | 3,711 | 806 | 1,143 | 2,424 | 806 | 1,143 | 1,002 | - | - | -
Assets placed with customers | 4,803 | 6,076 | 4,878 | 299 | 410 | 538 | 299 | 410 | 413 | - | - | -
Insurance products (savings and investment) | 5,075 | 6,267 | 7,740 | 268 | 397 | 437 | 268 | 397 | 437 | - | - | -

*The international operations, in addition to the activity of Bank Millennium in Poland and Millennium Bim in Mozambique, also include the
activity of Banco Millennium Atlântico in Angola, Millennium BCP Bank & Trust in the Cayman Islands and until 2020 the activity of Banque
Privée BCP in Switzerland. The presentation of the international activity accounts is in accordance with the Consolidated Accounts of the
Group, and there may be differences in relation to the accounts disclosed locally. In 2022, the aggregate of international operations
includes the impairment of the goodwill related to the Polish subsidiary, recorded in the consolidated accounts.
** In Poland, loans to customers (gross) include buy-sell back transactions (i.e. reverse repos) (2022: 1 million euros; 2021: 59 million
euros) and customer funds include sell-buy back transactions (i.e. repos) (2021: 4 million euros).
The performance of the activity in Portugal
resulted in a decrease of 5.9% of total assets,
compared to the 67,216 million euros posted as of
31 December 2021, standing at 63,268 million
euros at the end of 2022. This evolution is
explained by the reductions in deposits at central
banks (associated to the early repayment of the
bulk of the financing that had been obtained from
the European Central Bank within the scope of
targeted longer-term refinancing operations), in
securities portfolio, mainly due to the divestment
in Portuguese public debt and also in non-current
assets held for sale, in particular the portfolio of
real estate properties received as payment.
Conversely, there were increases in loans and
advances to credit institutions and loans to
customers portfolio (net of impairment).
In the international activity, total assets
amounted to 26,593 million euros as of 31
December 2022, showing an increase of 3.5%
compared to the 25,689 million euros posted at
the end of the previous year. As far as the
evolution of the balance sheet items is concerned,
there were increases in deposits at central banks,
in securities portfolio and loans and advances to
other credit institutions, in part offset by the
reduction in loan to customers portfolio (net of
impairment) and by the recognition of the
goodwill impairment associated with the
acquisition by the BCP Group of the control
percentage of the Polish subsidiary.

| 2022 REPORT & ACCOUNTS

82 |
Total liabilities of the Group stood at 83,940
million euros at the end of 2022, showing a
decrease of 2.2% compared to the 85,843 million
euros recorded at the end of 2021, essentially
driven by the decrease in resources from Central
Banks, following the early repayment of the first
tranche of the Targeted Longer-Term Refinancing
Operation III (“T LTRO III”) in December 2022,
contracted in June 2020 in the amount of 7,550
million euros. The evolution of non subordinated
debt securities issued also contributed to the
decrease in liabilities, which decreased from
2,188 million euros at the end of 2021 to 1,482
million euros at the end of 2022, being worth
mentioning the repayment of a covered bond issue
in the amount of 1,000 million euros in May and
the issue of senior preferred debt in the amount
of 350 million euros in October in order to meet
the objectives of the MREL (Minimum
Requirements for Own Funds and Eligible
Liabilities). Subordinated debt dropped slightly
from 1,395 million euros at the end of 2021 to
1,333 million euros at the end of 2022, being
worth mentioning that the Bank decided not to
exercise in December, the early repayment option
on a Tier 2 debt amounting to 300 million euros,
launching an exchange offer over the securities
not reimbursed, for other debt of the same nature
issued with a higher coupon and longer maturity,
with the amount of the new issue set at 134
million euros. Conversely, there was a positive
evolution in deposits and other resources from
customers, standing at 75,907 million euros as at
31 December 2022 (6,347 million euros above the
figure recorded at the end of 2021), reinforcing
the importance as the main financing source of
assets.
Equity, including non-controlling interests,
totalled 5,921 million euros at the end of 2022,
below the 7,062 million euros recorded at the end
of the previous year. Equity attributable to the
shareholders of the Bank also showed a reduction
from 6,119 million euros at the end of 2021 to
5,138 million euros on 31 December 2022, since
the positive impact of actuarial deviations
associated with the pension fund and net income
for the year was more than offset by the negative
evolution of the fair value reserve, mainly due to
the impact generated by cash flow hedging
instruments.

2022 REPORT & ACCOUNTS |

|83
LOANS TO CUSTOMERS
Millennium bcp's consolidated customer loan
portfolio 7 (gross loans, that is, before impairment
and fair value adjustments) amounted to 57,713
million euros as of 31 December 2022, standing
below the 58,231 million euros figure achieved at
the end of the previous year, mainly due to the
reduction recorded in the international activity,
despite the fact that the increase in the activity
in Portugal partially offset that reduction.
LOANS AND ADVANCES TO CUSTOMERS (*)
Million euros
(*) Before impairment and fair value adjustments and on a comparable
basis: excludes the impact from discontinued operations
In the activity in Portugal, loans to customers
(before impairment) amounted to 40,149 million
euros as of 31 December 2022, standing 0.7%
above the 39,866 million euros recorded at the
end of 2021. The growth of loans portfolio (net)
includes, on the one hand, the increase of the
performing loans, which has grown by 800 million
euros during 2022 and on the other hand, the
reduction of 517 million euros in NPE from 1,878
million euros as of 31 December 2021 to 1,361
million euros at the end of 2022. It should be
noted that the Bank has been successfully
implementing a strategy of NPE reduction, in
order to achieve the targets defined in the plan
approved for the reduction of this type of
exposure.
In the international activity, loans to customers
(gross) amounted to 17,564 million euros as of 31
December 2022, standing 4.4% below the 18,365
million euros posted at the end of 2021. The
Polish subsidiary recorded a decrease in loan
portfolio compared to the same date of the
previous year, driven by the reduction in
mortgage loans, as a result of the provision
booked for credit holidays program and a lower
amount of credit granted to companies.
Conversely, loan portfolio in the subsidiary in
Mozambique recorded an increase amplified by
the Metical appreciation vs euro.
LOANS AND ADVANCES TO CUSTOMERS GROSS

Million Euros
| 2022 | 2021 | 2020 comparable (1) | Chg. 22/21
INDIVIDUALS |  |  |  |
Mortgage loans | 28,124 | 28,072 | 26,363 | 0.2%
Personnal loans | 6,042 | 5,999 | 5,789 | 0.7%
| 34,165 | 34,071 | 32,152 | 0.3%
COMPANIES |  |  |  |
Services | 8,037 | 8,297 | 8,280 | -3.1%
Commerce | 4,055 | 4,231 | 4,031 | -4.2%
Construction | 1,532 | 1,766 | 1,796 | -13.2%
Other | 9,923 | 9,866 | 9,435 | 0.6%
| 23,548 | 24,160 | 23,542 | -2.5%
| 57,713 | 58,231 | 55,694 | -0.9%
Discontinued operations (1) | — | — | 354 |
TOTAL | 57,713 | 58,231 | 56,048 | -0.9%

(1) Following the sale of Banque Privée BCP in Switzerland in 2021, its historical figures related to 2020 were included in a single line
called "Discontinued Operations" in order to ensure the comparability of information.

| 2022 REPORT & ACCOUNTS

84 |
7 Following the sale of the Swiss subsidiary in 2021, the respective historical values of 2020 are not being considered within the scope of this analysis, in order to ensure
comparability of information.
The structure of the consolidated (gross) loans to
customers portfolio maintained balanced patterns
of diversification, with the relative weight of
loans to individuals, in the total amount of the
portfolio, standing at 59.2% as of 31 December
2022, which compares with 58.5% at the end of
2021. On the other hand, the weight of credit to
companies stood at 40.8% at the end of 2022,
comparing to 41.5% on 31 December 2021. Still
with regard to credit to individuals, at the end of
2022 mortgage loans represented 82.3% of loans
to individuals and personal loans represented
17.7%, which compares with the respective
weights of 82.4% and 17.6% recorded in 2021.
Consolidated loans to individuals, at 31 December
2022 amounted to 34,165 million euros, 0.3%
above the 34,071 million euros recorded at the
end of the previous year, being positively
influenced by the activity in Portugal, which
recorded a growth rate of 3.4% compared to the
same date the previous year and negatively
affected by the evolution in international activity,
which fell by 4.4% year-on-year.
In the activity in Portugal, loans to individuals
increased from 20,505 million euros accounted on
31 December 2021 to 21,194 million euros at the
same date in 2022, mainly driven from the
dynamism of mortgage loans, which compared to
31 December 2021 recorded an increase of 3.4%.
Loans to individuals in the international activity
showed a contraction, evolving from 13,566
million euros as of 31 December 2021 to 12,971
million euros at the end of 2022, with this
evolution being essentially explained by the
behaviour of mortgage loans in the Polish
subsidiary, as previously mentioned.
As for the foreign currency credit portfolio in the
Polish subsidiary, mostly denominated in Swiss
francs, it continued to show a relevant downward
trend, falling from 2,185 million euros as of 31
December 2021 to 1,504 million euros as of 31
December 2022, representing 12.4% and 8.9% of
the total amount of credit recorded on the
balance sheet of Bank Millennium and 3.8% and
2.6% of the Group's total loans portfolio at the end
of 2021 and 2022, respectively.
It should be noted that this foreign exchange loan
portfolio before provisions for individual mortgage
loans in Swiss francs 8 (which amounted to 589
million euros and 904 million euros on 31
December 2021 and 2022, respectively) and
deducted from the part relating to Euro Bank S.A.
(whose risk is fully secured by a third party, under
the clauses provided for in the contract of
acquisition of that entity) amounted to 2,609
million euros at the end of 2021 and 2,277 million
euros at the end of 2022, resulting in a reduction
of 12.7% compared to the same date the previous
year.

2022 REPORT & ACCOUNTS |

|85
8 In the first half of 2021, the Group changed the presentation of provisions for individual mortgage loans in Swiss francs, starting to allocate provisions for future legal risks and
recognising them as a reduction in the gross book value of loans for those where a reduction in cash flows is expected, as provided for under IFRS 9.
On the other hand, personal loans, in consolidated
terms, recorded a slight increase of 0.7%
compared to the end of the previous year,
amounting to 6,042 million euros at the end of
2022. In this context, it is important to highlight
the contribution of the activity in Portugal, in
which personal loans increased by 69 million euros
compared to the figure recorded in the previous
year.
LOANS AND ADVANCES TO CUSTOMERS (*)
Million euros
(*) Before impairment and fair value adjustments and on a
comparable basis: excludes the impact from discontinued
operations
Loans to companies, in consolidated terms,
totalled 23,548 million euros at 31 December
2022, standing 2.5% below from 24,160 million
euros at the end of 2021, benefiting from the
positive contributions of both the activity in
Portugal (406 million euros less in comparison to
the same date in the previous year), driven by the
NPE reduction and the international activity (206
million euros less compared to the same date last
year), influenced by the reduction of exposure
verified in the Polish subsidiary.
In the activity in Portugal, loans to companies fell
by 2.1% compared to 2021, amounting to 18,955
million euros at the end of 2022. Regarding the
credit granted by the Bank under the COVID-19
lines guaranteed by the Portuguese State, the
total figure of credit stood at 2,042 million euros
as at 31 December 2022, comparing to 2,577
million euros recorded in the same date in the
previous year. At the end of 2022, the total
amount of credit under the COVID-19 lines
represented about 5.1% of the total loan portfolio
for the activity in Portugal.
Regarding the quality of the credit portfolio
previously subject to a moratorium, which at the
end of 2022 amounted to 6,500 million euros
(expired moratoriums), it should be noted that
89% of this exposure corresponded to performing
loans. Consequently, 11% were related to non-
performing exposures (operations classified as
stage 3), which compares with a percentage of
non-performing exposures of 3.4%9 of the total
loan portfolio for the activity in Portugal.
Loans to companies in the international activity
recorded a reduction of 4.3%, in comparison with
the 4,799 million euros achieved on 31 December
2021, standing at 4,593 million euros at the end of
2022. By geographies, there was a credit
contraction in the Polish subsidiary and an
increase in the subsidiary in Mozambique, that
was not sufficient to avoid a reduction in the
amounts of loans to companies.

| 2022 REPORT & ACCOUNTS

86 |
9 NPE ratio, measured by the quotient between non-performing exposures (only exposures included in the aggregate of loans to customers) and total loans (gross).
LOANS AND ADVANCES TO CUSTOMERS GROSS

Million euros
| 2022 | 2021 | 2020 comparable (1) | Chg. 22/21
MORTGAGE LOANS |  |  |  |
Activity in Portugal | 19,014 | 18,394 | 17,462 | 3.4%
International Activity | 9,110 | 9,678 | 8,901 | -5.9%
| 28,124 | 28,072 | 26,363 | 0.2%
PERSONNAL LOANS |  |  |  |
Activity in Portugal | 2,180 | 2,111 | 2,065 | 3.3%
International Activity | 3,862 | 3,888 | 3,723 | -0.7%
| 6,042 | 5,999 | 5,789 | 0.7%
COMPANIES |  |  |  |
Activity in Portugal | 18,955 | 19,361 | 18,945 | -2.1%
International Activity | 4,593 | 4,799 | 4,597 | -4.3%
| 23,548 | 24,160 | 23,542 | -2.5%
LOANS AND ADVANCES TO CUSTOMERS |  |  |  |
Activity in Portugal | 40,149 | 39,866 | 38,473 | 0.7%
International Activity | 17,564 | 18,365 | 17,221 | -4.4%
| 57,713 | 58,231 | 55,694 | -0.9%
Discontinued operations (1) | — | — | 354 |
TOTAL | 57,713 | 58,231 | 56,048 | -0.9%

(1) Following the sale of Banque Privée BCP in Switzerland in 2021, its historical figures related to 2020 were included in a single line
called "Discontinued Operations" in order to ensure the comparability of information.
The quality of the credit portfolio continues to
benefit from the focus on selectivity and
monitoring of the credit risk control processes, as
well as from the initiatives carried out by the
commercial and credit recovery areas, in order to
recover non-performing loans over the recent
years.
Since the outbreak of the Russia/Ukraine conflict,
the Bank has performed a set of quantitative and
qualitative analysis to assess the potential impacts
in the performance of the credit portfolio. This
evaluation was carried out, particularly, in
Portugal and Poland, the latter being a geography
potentially more exposed to the impacts of this
event, considering it is a neighbouring country of
Ukraine. Taking into consideration that it is not
possible to foresee how the conflict will evolve, it
is difficult to determine to the full extent of the
economic consequences in the Bank’s business and
near/mid-term prospects, namely regarding the
effects of the impacts on the energy sector, on
the distribution chains of several products and
commodities, on inflationary pressures and on the
level of interest rates. Nevertheless, specific
portfolios were identified as being potently more
vulnerable and for which more closely monitoring
procedures were putted in place. These
procedures are described in Note 54 of the Notes
to the Consolidated Accounts, which presents, in
this context, the corporate loan portfolio in
sectors identified as potentially more vulnerable
to the current macroeconomic and geopolitical
context.
The quality of the loan portfolio continued to
register a favourable evolution. In this context,
overdue loans for more than 90 days, on a
consolidated basis, showed a decrease of 47.8%
compared to the 949 million euros accounted at
the end of 2021, amounting to 496 million euros
on 31 December 2022. The total volume of
overdue loans, on a consolidated basis, also
recorded a reduction of 45.3% in relation to the
1,080 million euros accounted for on 31 December
2021, standing at 590 million euros on the same
date of 2022, benefiting from the evolution
verified in the activity in Portugal, where there
was a decrease from 605 million euros recorded at
the end of 2021 to 201 million euros at the end of
2022.

2022 REPORT & ACCOUNTS |

|87
The NPE stock, in consolidated terms, decreased
to 2,218 million euros on 31 December 2022,
showing a reduction of 535 million euros
compared to the end of 2021. In the activity in
Portugal, the NPE stock amounted to 1,361 million
euros at the end of 2022, with an equally
expressive reduction of 517 million euros recorded
in the same period.
The improvement in credit quality is also
evidenced by the favourable evolution of the
respective indicators, namely the ratio of overdue
for loans by more than 90 days over total loans to
customers, on a consolidated basis, which
dropped from 1.6% on 31 December 2021 to 0.9%
on 31 December 2022 and NPL ratios by more than
90 days and NPE ratios as a percentage of the
total loan portfolio, on a consolidated basis,
which evolved from 2.1% and 4.7% at the end of
2021 to 1.3% and 3.8% at 31 December 2022,
respectively, essentially reflecting the
performance of the loan portfolio in Portugal.
At the same time, the coverage ratios of several
credit aggregates also presented a positive
evolution, being worth mentioning that NPL by
more than 90 days coverage, in consolidated
terms, rose by about 58 pp in relation to 2021,
from 151.2% at the end of 2021 to 208.9% as of 31
December 2022. The coverage ratio of overdue
loans by more than 90 days, on a consolidated
basis, was 305.8% as of 31 December, 2022, which
compares with a ratio of 197.0% on the same date
in 2021 (in Portugal and for the same dates, this
ratio was set at 519.5% and 219.5%, respectively).
The coverage of NPE by impairments, in
consolidated terms, stood at 68.3% at the end of
2022, showing some stability compared to the
values recorded in the previous year (68.0% on 31
December 2021). In Portugal, the coverage of NPE
by impairments stood at 68.6% on 31 December
2022, also remaining at a similar level to that
recorded in the previous year (68.5% on 31
December 2021).
CREDIT QUALITY
Million euros
Still regarding to the coverage ratios, we highlight
that the coverage of foreign exchange mortgage
loan portfolio in the Polish Subsidiary 10 was
reinforced from 25.7% as of 31 December 2021 to
46.8% as of 31 December 2022.

| 2022 REPORT & ACCOUNTS

88 |
10 Coverage ratio measured by the quotient between the total amount of provisions booked (672 million euros and 1,065 million euros, including both provisions consisting
directly of reduction in asset value and provisions in liabilities, at the end of 2021 and 2022, respectively) and the total amount of the portfolio. before the provisions directly
reducing the gross book value of the loans and excluding exposure from Euro Bank S.A. (2,609 million euros and 2,277 million euros at the end of 2021 and 2022, respectively).
CREDIT QUALITY INDICATORS

| Group |  | Activity in Portugal
Dec. 22 | Dec. 21 | Dec. 20 | Chg. 22/21 |  | Dec. 22 | Dec. 21 | Dec. 20 | Chg. 22/21
STOCK |  |  |  |  |  |  |  |  |
Loans to customers (gross) | 57,713 | 58,231 | 56,048 | -0.9% |  | 40,149 | 39,866 | 38,473 | 0.7%
Overdue loans > 90 days | 496 | 949 | 1,297 | -47.8% |  | 180 | 586 | 918 | -69.3%
Overdue loans | 590 | 1,080 | 1,420 | -45.3% |  | 201 | 605 | 933 | -66.8%
Restructured loans | 1,866 | 2,564 | 2,661 | -27.2% |  | 1,341 | 2,069 | 2,174 | -35.2%
Non-performing loans (NPL) > 90 days | 725 | 1,237 | 1,766 | -41.4% |  | 333 | 776 | 1,255 | -57.0%
Non-performing exposures (NPE) * | 2,218 | 2,752 | 3,295 | -19.4% |  | 1,361 | 1,878 | 2,363 | -27.5%
Loans impairment (Balance sheet) | 1,515 | 1,871 | 2,073 | -19.0% |  | 935 | 1,286 | 1,488 | -27.3%
NPE impairment (Balance sheet) * | 1,011 | 1,369 | 1,644 | -26.2% |  | 592 | 917 | 1,212 | -35.5%
CREDIT QUALITY |  |  |  |  |  |  |  |  |
Overdue loans > 90 days / Loans to customers (gross) | 0.9% | 1.6% | 2.3% |  |  | 0.4% | 1.5% | 2.4% |
Overdue loans / Loans to customers (gross) | 1.0% | 1.9% | 2.5% |  |  | 0.5% | 1.5% | 2.4% |
Restructured loans / Loans to customers (gross) | 3.2% | 4.4% | 4.7% |  |  | 3.3% | 5.2% | 5.7% |
Non-performing loans (NPL) > 90 days / Loans to customers (gross) | 1.3% | 2.1% | 3.2% |  |  | 0.8% | 1.9% | 3.3% |
Non-performing exposures (NPE) * / Loans to customers (gross) | 3.8% | 4.7% | 5.9% |  |  | 3.4% | 4.7% | 6.1% |
EBA |  |  |  |  |  |  |  |  |
NPE ratio (includes debt securities and off-balance exposures) | 2.6% | 3.2% | 4.0% |  |  | 2.4% | 3.1% | 4.2% |
COVERAGE BY IMPAIRMENTS |  |  |  |  |  |  |  |  |
Coverage of overdue loans > 90 days | 305.8% | 197.0% | 159.8% |  |  | 519.5% | 219.5% | 162.0% |
Coverage of overdue loans | 256.7% | 173.3% | 146.0% |  |  | 465.6% | 212.6% | 159.6% |
Coverage of Non-performing loans (NPL) > 90 days | 208.9% | 151.2% | 117.4% |  |  | 280.4% | 165.8% | 118.6% |
Coverage of Non-performing exposures (NPE) * | 68.3% | 68.0% | 62.9% |  |  | 68.6% | 68.5% | 63.0% |
Specific coverage of Non-performing exposures (NPE) * | 45.6% | 49.7% | 49.9% |  |  | 43.5% | 48.8% | 51.3% |

* NPE include loans to customers only, as defined in the glossary.

2022 REPORT & ACCOUNTS |

|89
CUSTOMER FUNDS
Total customer funds 11 amounted to 92,808
million euros as of 31 December 2022, showing a
favourable evolution, increasing by 3.0%
compared to the 90,097 million euros posted at
the end of 2021. This increase, in the amount of
2,711 million euros compared to the same date
of the previous year, was achieved due to the
strong performance of the activity in Portugal,
which registered a growth of 1,971 million euros,
but also to the contribution of the international
activity, which showed an increase of 740 million
euros. While there was an expansion of balance
sheet customer funds, a decrease was observed
in off-balance sheet customer funds.
TOTAL CUSTOMER FUNDS (*)
Million euros
(*) On a comparable basis: excludes the impact from
discontinued operations
TOTAL CUSTOMER FUNDS

Million euros
| 2022 | 2021 | 2020 comparable (1) | Chg. 22/21
BALANCE SHEET CUSTOMER FUNDS |  |  |  |
Deposits and other resources from customers | 75,907 | 69,560 | 62,621 | 9.1%
Debt securities placed with customers | 1,343 | 1,615 | 1,505 | -16.8%
| 77,250 | 71,175 | 64,125 | 8.5%
OFF BALANCE SHEET CUSTOMER FUNDS |  |  |  |
Assets under management | 5,114 | 5,773 | 4,712 | -11.4%
Assets placed with customers | 5,102 | 6,486 | 5,291 | -21.3%
Insurance products (savings and investment) | 5,343 | 6,663 | 8,177 | -19.8%
| 15,558 | 18,922 | 18,180 | -17.8%
Discontinued operations (1) | — | — | 2,186 |
TOTAL | 92,808 | 90,097 | 84,492 | 3.0%

(1) Following the sale of Banque Privée BCP in Switzerland in 2021, its historical figures related to 2020 were included in a single line
called "Discontinued Operations" in order to ensure the comparability of information. From the total amount of customer funds relating to
Banque Privée BCP, which amounted to 2,186 million euros as of 31 December 2020, 638 million euros relates to balance sheet and 1,548
million euros to off-balance sheet customer funds.
In the activity in Portugal, total customer funds
reached 68,262 million euros as of 31 December
2022, which compares to the 66,290 million euros
achieved on the same date of the previous year,
reflecting especially the increase of 5,021 million
euros in deposits and other resources from
customers in the same date of the previous year.
In the international activity, total customer funds
rose by 3.1%, compared to 23,806 million euros
recorded as of 31 December 2021, amounting to
24,546 million euros at the end of 2022.
Balance sheet customer funds, that include
deposits and other resources from customers and
debt securities placed with customers, amounted
to 77,250 million euros as of 31 December 2022,
showing an increase of 6,075 million euros from
the 71,175 million euros recorded at the end of
the previous year. This increase was due to the
strong performance of the activity in Portugal,
which recorded a growth of 4,758 million euros,
but also attributable to the contribution of
international activity, which grew by 1,317 million
euros.

| 2022 REPORT & ACCOUNTS

90 |
11 Following the sale of the Swiss subsidiary in 2021, the respective historical values of 2020 are not being considered within the scope of this analysis, in order to ensure
comparability of information.
On 31 December 2022, balance sheet customer
funds, on a consolidated basis, represented 83.2%
of total customer funds (79.0% at the end of
2021), with deposits and other resources from
customers, on a consolidated basis, representing
81.8% of total customer funds (77.2% at the end of
2021).
Deposits and other resources from customers of
the Group showed an increase of 9.1% against the
69,560 million euros recorded on 31 December
2021, totalling 75,907 million euros at the end of
2022, continue to represent an important source
of funding. The increase of 6,347 million euros
compared to the amount calculated in December
2021 resulted from the significant growth seen in
activity in Portugal, whose increase of 5,021
million euros reflects an increase in private
savings and confidence in the bank's franchise. In
the international activity, at the end of 2022, the
amount of deposits and other resources from
customers increased by 1,325 million euros
compared to the same date of the prior year,
benefiting both from the increasing volumes of
deposits in the Polish operation, as well as in the
Mozambican operation, even though in this case
the increase was less significant.
Debt securities placed with customers, which
corresponds to the Group's issues of debt
securities subscribed by clients, recorded a
decrease of 16.8% compared to the end of 2021,
standing at 1,343 million euros at end of 31
December 2022. This decrease is justified by the
evolution seen in the activity in Portugal 12, whose
debt securities placed with customers evolved
from 1,606 million euros at the end of 2021 to
1,343 million euros at the end of 2022.
BALANCE SHEET CUSTOMER FUNDS (*)
Million euros
(*) On a comparable basis: excludes the impact from
discontinued operations
As of 31 December 2022, off-balance sheet
customer funds stood at 15,558 million euros,
dropping by 17.8% comparing to the 18,922 million
euros posted in the same date in the prior year,
with this decrease being noticeable in all business
segments, reflecting the devaluation of some
portfolios due to the negative evolution of the
financial markets and the lower appetite for
investment products in a context of greater
uncertainty. This evolution is explained by the
behaviour of the activity in Portugal, whose off-
balance sheet customer funds evolved from
16,972 million euros as of 31 December 2021 to
14,185 million euros at the end of 2022. At the
same time, the international activity, also
contributed to this decline, but on a smaller
scale, evolving from 1,950 million euros as of 31
December 2021 to 1,373 million euros as of 31
December 2022.
OFF BALANCE SHEET CUSTOMER FUNDS (*)
Million euros
(*) On a comparable basis: excludes the impact from
discontinued operations
Assets under management, which result from the
provision of the service of managing portfolios of
clients under existing agreements for their
placement and administration, amounted to 5,114
million euros as of 31 December 2022, standing
11.4% below the 5,773 million euros posted at the
end of 2021, due both to the performance of the
international activity, where the amount of assets
under management decreased by 337 million
euros, as well as the activity in Portugal, where a
similar drop in the amount of 322 million euros
was recorded.
Assets placed with customers, which in turn
correspond to the amounts held by customers
within the scope of placing third-party products
that contribute to the recognition of commissions,
also recorded a drop compared to the 6,486
million euros recorded as of 31 December 2021,
amounting to 5,102 million euros on 31 December

2022 REPORT & ACCOUNTS |

|91
12 In the international activity, no debt securities placed with customers were recorded in 2022 (9 million euros recorded in 2021).
2022. The decrease of 1,273 million euros
registered in the activity in Portugal was the main
reason for the evolution observed in consolidated
terms.
Insurance products (savings and investment)
amounted to 5,343 million euros on 31 December
2022, recording a decrease of 19.8% compared to
the 6,663 million euros accounted for on the same
date of the previous year, with this evolution
being explained by the activity in Portugal, which
contributed with less 1,192 million euros for this
item.
TOTAL CUSTOMER FUNDS

Million euros
| 2022 | 2021 | 2020 comparable (1) | Chg. 22/21
BALANCE SHEET CUSTOMER FUNDS |  |  |  |
Activity in Portugal | 54,077 | 49,319 | 44,658 | 9.6%
International Activity | 23,173 | 21,856 | 19,467 | 6.0%
| 77,250 | 71,175 | 64,125 | 8.5%
OFF BALANCE SHEET CUSTOMER FUNDS |  |  |  |
Activity in Portugal | 14,185 | 16,972 | 16,329 | -16.4%
International Activity | 1,373 | 1,950 | 1,852 | -29.6%
| 15,558 | 18,922 | 18,180 | -17.8%
TOTAL CUSTOMER FUNDS |  |  |  |
Activity in Portugal | 68,262 | 66,290 | 60,987 | 3.0%
International Activity | 24,546 | 23,806 | 21,319 | 3.1%
Discontinued operations (1) | — | — | 2,186 |
TOTAL | 92,808 | 90,097 | 84,492 | 3.0%

(1) Following the sale of Banque Privée BCP in Switzerland in 2021, its historical figures related to 2020 were included in a single line
called "Discontinued Operations" in order to ensure the comparability of information. From the total amount of customer funds relating to
Banque Privée BCP, which amounted to 2,186 million euros as of 31 December 2020, 638 million euros relates to balance sheet and 1,548
million euros to off-balance sheet customer funds.

| 2022 REPORT & ACCOUNTS

92 |
NON-CURRENT ASSETS HELD FOR SALE
Non-current assets held for sale recorded a decrease of 36.1% as of 31 December 2022 compared to the
same date of the last year, amounting to 499 million euros at the end of the year. It should be noted that
all asset categories showed a reduction in value compared to the existing position at the end of 2021, with
special emphasis on real estate, which on 31 December 2022 amounted to 470 million euros, while on the
same date in 2021 totalled 748 million euros (amounts net of impairments), reflecting the Bank's effort in
pursuing the strategy of divestment in this type of non-productive assets.
Other assets (which include, mainly, equipment and financial assets), have a minor weight in the overall
calculation of this item, having recorded a decrease of 9.4% compared to 31 December 2021.
NON-CURRENT ASSETS HELD FOR SALE

Million euros
| 2022 | 2021 | 2020 | Chg. 22/21
REAL ESTATE |  |  |  |
Arising from recovered loans | 236 | 503 | 702 | -53.1%
From investment funds and real estate companies | 220 | 229 | 257 | -3.7%
For own use | 14 | 17 | 19 | -17.4%
| 470 | 748 | 978 | -37.2%
OTHER ASSETS |  |  |  |
Equipment | 16 | 17 | 28 | -5.6%
Other assets | 13 | 15 | 20 | -13.8%
| 29 | 32 | 48 | -9.4%
TOTAL | 499 | 781 | 1,026 | -36.1%

2022 REPORT & ACCOUNTS |

|93
SECURITIES PORTFOLIO
The securities portfolio, as defined above, stood at 19,918 million euros as of 31 December 2022, showing a
decrease compared to the 21,201 million euros recorded on the same date of the previous year, now
representing 22.2% of total assets at the end of 2022 (22.8% at the end of 2021).
In this evolution, the decrease of 1,173 million euros in the public debt securities portfolio held by the
Group should be highlighted, which saw its value decreasing from 17,704 million euros at the end of 2021 to
16,531 million euros at 31 December 2022, although its share in the total amount of the portfolio remained
globally in line with the previous year (83.0% and 83.5% at the end of 2022 and 2021, respectively).
The performance of the Group's securities portfolio was determined by the decrease of 1,567 million euros
in the portfolio related to the activity in Portugal, which had a balance sheet carrying amount of 14,561
million euros at the end of 2022 compared to 16,128 million euros on 31 December 2021, which was
followed by the strengthening of public debt in the euro zone, namely French and Spanish public debt.
The securities portfolio related to international activity stood at a higher level than that the one observed
at the end of 2021, having evolved from the 5,072 million euros calculated on that date, to 5,357 million
euros on 31 December 2022. Regarding investment in public debt in the international activity, there was a
reduction compared to the levels recorded in the previous year, due to the divestment in Polish public
debt, which was not fully compensated by the increase of Mozambican public debt and in public debt of
other countries.
The increase in the portfolio of financial assets at amortised cost reflects the prevalence of the objective of
holding the securities acquired more recently, contrasting with a reduction in the portfolio of financial
assets at fair value through other comprehensive income. The portfolio of financial assets at fair value
through profit or loss includes the Bank's stakes in corporate restructuring funds, with the reduction
observed in 2022 mainly determined by the sale of some stakes at the end of the year.
SECURITIES PORTFOLIO

Million euros
| 2022 | 2021 | 2020 | Chg. 22/21
Financial assets measured at amortised cost (1) | 11,535 | 6,897 | 4,637 | 67.2%
Financial assets measured at fair value through profit or loss (2) | 922 | 1,413 | 1,449 | -34.7%
Financial assets measured at fair value through other comprehensive income | 7,462 | 12,891 | 12,140 | -42.1%
TOTAL | 19,918 | 21,201 | 18,226 | -6.0%
of which: |  |  |  |
Activity in Portugal | 14,561 | 16,128 | 13,320 | -9.7%
International activity | 5,357 | 5,072 | 4,906 | 5.6%

(1)Corresponds to debt instruments not associated to credit operations, including treasury bills
(2)Excluding the amounts related to loans to customers and trading derivatives.

| 2022 REPORT & ACCOUNTS

94 |
LOANS AND AMOUNTS OWED TO CREDIT INSTITUTIONS
Resources from credit institutions, including central banks, net of deposits and advances to other credit
institutions, totalled a positive value of 291 million euros at the end of 2022, which compares to a positive
value of 8,081 million euros on 31 December 2021. This evolution mainly incorporates the impact of the
early repayment of the longer-term refinancing operation directed III (LTRO III, “T LTRO III” in English
abbreviation) in December 2022, which had been contracted in June 2020 in the amount of 7,550 million
euros.
OTHER ASSET ITEMS
The other asset items, which comprise hedging and trading derivatives, investments in associates,
investment properties, other tangible assets, goodwill and intangible assets, current and deferred tax
assets and other assets, stood at 6,047 million euros on 31 December 2022, representing 6.7% of total
consolidated assets, and by the end of 2021, other asset items represented 6.4% of total consolidated
assets, totalling 5,952 million euros.
EQUITY
On 31 December 2022, total equity (including non-controlling interests) amounted to 5,921 million euros,
1,141 million euros below the equity of 7,062 million euros existing at the end of the previous year.
The reduction in the Group’s equity, including non-controlling interests, results from the combined effect
of the reduction in equity attributable to the Bank’s shareholders, which evolved from 6,119 million euros
at the end of December 2021 to 5,138 million euros on 31 December 2022 and the decrease in non-
controlling interests, from 943 million euros at the end of the previous year to 782 million euros in 2022,
motivated by the reduction in the net position of the subsidiary in Poland, justified by the losses incurred in
the year.
The decrease in equity attributable to the Bank’s shareholders resulted mainly from the negative impact of
the fair value reserve, which decreased by 1,404 million euros, net of taxes and interest from coupons of
the Additional Tier 1 instruments, which amounted to 37 million euros. Conversely, the capital attributable
to the Bank’s shareholders benefited from the integration of the net profit for the year which totalled 207
million euros, the positive actuarial deviations associated to the pension fund which amounted to 247
million euros after tax and the positive exchange rate consolidation differences, totalling 18 million euros.
Still with regard to equity, it should be noted that following the resolution of the General Shareholders'
Meeting on 20 December 2022, a reformulation of equity was approved, comprising the reinforcement of
funds susceptible of regulatory qualification as distributable, through the reduction of the share capital of
1,725 million euros to 3,000 million euros, with no change in total equity.

2022 REPORT & ACCOUNTS |

|95
Business Areas

Activity per Segments
Millennium bcp conducts a wide range of banking activities and financial services in Portugal and abroad, with
special focus on Retail Banking, Companies Banking and Private Banking business.

BUSINESS SEGMENT | PERIMETER
Retail Banking | Retail Network of Millennium bcp (Portugal) Retail Recovery Division Banco ActivoBank
Companies, Corporate & Investment Banking | Companies and Corporate Network of Millennium bcp (Portugal) Specialised Recovery Division Interfundos Large Corporate Network of Millennium bcp (Portugal) Specialised Monitoring Division Investment Banking Trade Finance Department
Private Banking | Private Banking Network of Millennium bcp (Portugal) Millennium Banque Privée (Switzerland) (*) Millennium bcp Bank & Trust (Cayman Islands) (*)
Foreign Business | Bank Millennium (Poland) BIM - Banco Internacional de Moçambique Banco Millennium Atlântico (**) Millennium Banque Privée (Switzerland) (*) Millennium bcp Bank & Trust (Cayman Islands) (*)
Other | Comprises the activity carried out by Banco Comercial Português, S.A. not included in the commercial business in Portugal which corresponds to the segments identified above, including the activity carried out by Macao branch. Also includes all other business and unallocated values in particular centralized management of financial investments, corporate activities and insurance activity.

(*) For the purposes of business segments, Millennium Banque Privée (Switzerland) and Millennium bcp Bank & Trust (Cayman Islands) are included in the Private Banking
segment. In terms of geographic segments, both operations are considered Foreign Business. It should be noted that, following the sale of the operation in Switzerland on 2
November 2021, the subsidiary's net income in December 2021, the capital gain generated with the sale of the entire shareholding in Banque Privée BCP (Suisse), S.A. (as
well as the adjustments occurred in 2022), are reflected as income from discontinued operations, as provided for in IFRS 5.
(**) Consolidated by the equity method.
The figures reported for each segment resulted
from aggregating the subsidiaries and business units
integrated in each segment. For the business units
in Portugal, the aggregation process reflects the
impact from capital allocation and balancing
process in the balance sheet and income statement,
based on average figures. The balance sheet
headings for each business unit and Portuguese
subsidiaries were re-calculated, considering the
replacement of the equity book values by the
amounts assigned through the allocation process,
based on the regulatory solvency criteria.
Thus, as the process of capital allocation complies
with the regulatory criteria of solvency in force, the
risk weighted assets, and consequently the capital
allocated to the business segments, are determined
in accordance with the Basel III framework,
pursuant to the CRD IV/CRR. The capital allocated
to each segment resulted from the application of a
target capital ratio to the risks managed by each
segment, reflecting the application of the Basel III
methodology previously referred. Each operation is
balanced through internal transfers of funds, with
impact on the net interest income and income
taxes of each segment, hence with no impact on
consolidated accounts.
Each segment’s income includes the non-controlling
interests, when applicable. Therefore, the values of
net income presented incorporate the individual
net income of the business units, regardless of the
percentage stake held by the Group, and the
impacts of the transfers of funds described above.
Operating costs related to the business segments do
not include headcount adjustment costs and other
costs considered as specific items recorded in
December 2022 and in December 2021.
The information presented below for the
individually more relevant business areas in
Portugal and aggregately for the international
activity was based on the financial statements
prepared in accordance with IFRS and on the
organization of the Group's business areas as at 31
December 2022. In this context, it should be noted
that, following the sale of the entire share capital

| 2022 REPORT & ACCOUNTS

96 |
of Banque Privée BCP (Suisse) S.A. to the Union
Bancaire Privée, UBP SA, the contribution of this
subsidiary to the net income of the Foreign Business
segment is reflected as income from discontinued
operations. Banque Privée BCP (Suisse) S.A. ceased
to be part of the BCP Group on 2 November 2021,
the date on which the sale of this subsidiary was
completed. In this context, income from
discontinued operations also reflect the capital gain
from the sale of the operation and its adjustments
in occurred in 2022. It should also be noted that on
29 December 2021, BIM – Banco Internacional de
Moçambique, S.A. also formalized the sale to
Fidelidade of shares representing 70% of the share
capital and voting rights of Seguradora
Internacional de Moçambique, S.A., now designated
Fidelidade Moçambique - Companhia de Seguros
S.A., with BIM maintaining approximately 22% of its
share capital. The contribution of this subsidiary to
the net income of the Foreign Business segment is
also presented as income from discontinued
operations as at December 2021, as required by
IFRS 5.
RETAIL
Mass Market
In 2022, the Mass Market segment focused on
increasing the number of Customers with a First
Bank relationship, who are more linked and
profitable for the Bank. During the year, several
targeted marketing actions were developed with
the objective of increasing the average
involvement of Customers (cross-selling) and
raising wages.
When attracting Customers, priority was given to
the younger and digital segments. Thus, in the
2nd quarter, the Campaign to attract young
Customers, with strong publicity on Digital
channels, offered a general pass to a Summer
Festival, chosen by the Customer.
Also in the youth segment, a new positioning was
defined for university students with the “Unni”
brand, Integrated Solution GO! University, non-
financial offer aimed at the segment, preferential
conditions on personal loans for training,
discounts on specialization courses at Millennium's
partner Universities and insurance with coverage
for protection needs during exchange programs
(Erasmus).
The Mass Market segment developed several wage
campaigns with interesting offers for Customers.
At the same time, and with the aim of increasing
cross-networking, targeted actions were taken to
publicize and promote the exclusive offer aimed
at employees of corporate Customers through the
signing of formal agreements with the Bank -
Plano Mais Emprego. These Customers, whose
wage is domiciled at the Bank, have access to
exclusive benefits in various packages and very
distinctive services, in everyday products, loans
to individuals and insurance.
in the Mass Market segment, the Bank maintained
the strategy of increasing the Digital involvement
of Customers, through actions to collect/update
information, adherence to the digital statement
and activation/use of Digital channels, with
emphasis on the Millennium App. As a result of
this action, the Bank managed to reach the
historical milestone of 85% of active current
accounts with a statement in Digital format and
60% of M Customers using the App.
Prestige
During 2022, there was growth in the Customer
base through actions to capture, retain loyalty
and perform upgrades, ensuring the
reinforcement of the positioning as the 1st Bank
among Affluent Customers, highlighting the
campaigns aimed at potential Customers,
dynamization of protocols with Companies and
through the new positioning in Professional Orders
(Profession Advantage) and Universities (Training
Advantage).
The Bank maintained its focus on improving the
Customer experience and training in commercial
techniques with the launch of the B#1 Prestige
training programme, with a positive impact on
NPS Gestor.
There was an increase in the mortgage loan
portfolio and the Bank innovated in investment
services, consolidating the success of the
Personalized Investment service and the
contribution to the subscription of investment
products, having been recognized with the 5 Star
award in the category of “Financial Planning
Simulator”.
The continuous improvement of the Mobile
experience allowed for an increase in the number
of active Affluent Customers using the Millennium
App.
In Remote Customer Management, several
initiatives were implemented to optimize the
“Direct Prestige” service model, a service aimed
at Digital Prestige Customers, which allows
dedicated remote management over extended

2022 REPORT & ACCOUNTS |

|97
hours with an attractive and very competitive
value proposition.
Portuguese Diaspora & Foreigners
In 2022, a strong strategy was pursued to
strengthen the relationship and increase
proximity with these Customers, enhancing the
use of the Bank's Digital channels, with particular
emphasis on the Millennium App, through:
•Development of new functionalities, such as the
possibility of associating French Bank accounts
in the App, or Western Union transfers “Direct
to the Account”;
•Continuous improvement of the Customer
experience, with the translation of their
journeys into English, for example, on the
Mortgage Loan journey;
•Summer campaign aimed at joining the Bank's
Digital channels – currently, this Segment has
around 73% of active Customers on the App.
Millennium bcp continued to assert itself as the
Bank of the Portugueses abroad. The offer
dedicated to new Customers from the Portuguese
Diaspora was consolidated, with the celebration
of partnerships with several entities, in order to
attribute more advantageous conditions to these
Customers with the Bank.
Regarding the Partnership with Banque BCP, a
large number of Customers residing in France
were referenced until the end of 2022, with an
account in this banking institution, which allows
these Customers to access more advantageous
product conditions “Cá e Lá” by becoming
Customers of both Banks.
Business
In 2022, Millennium bcp maintained credit growth
in the Business segment, despite the challenging
scenario of rising interest rates and the
demanding economic context resulting from the
war in Europe.
With the increase in interest rates, resources
assumed greater importance in the 2nd half of
2022, with growth in the total resources portfolio
of Corporate Customers and a consequent
increase in market share.
Attracting new Customers continued to be a
strategic vector. The focus on attracting new
customers ensured the growth of the Business
Customer base.
Products
Loans to individuals
Throughout 2022, the Bank maintained its focus
on Loans to Individuals, providing a variety of
solutions adjusted to the needs of Customers, in
order to support them in the realization of their
projects.
In Personal Credit, emphasis should be given to
the continuation of the dynamism of the Digital
Channels (App and website). In this context, and
also bearing in mind the sustainability policy, a
new fully digital journey was created for the
contracting of a product destined to finance
equipment for the production of renewable
energy.
The Bank provided credit solutions aimed at
Customers with greater potential for profitability
and continued to support the training of young
people, through the University Credit with Mutual
Guarantee.
In Real Estate Credit, the following stand out:
The implementation of a campaign with strong
visibility in various media, using a figure widely
recognized by the public, with the aim of placing
Millennium bcp solutions in the top mind of
Customers.
The provision, throughout the year, of attractive
and advantageous solutions with a view to
attracting operations from Customers with greater
potential for profitability. At the same time, it
continued to focus on the offer for the “Youth”
segment.
In Digital, and continuing the process of
innovation, simplification, agility and speed in
processes, several functionalities were
implemented during 2022, namely the online
credit application and the monitoring of the
stages of the contracting process.
Bearing in mind the Bank's sustainability policy,
an offer with special conditions was created to
promote the acquisition of properties with better
energy efficiency.
At the end of the year, the entry into force of the
Support Measures for Customers with Credit for
their own and permanent housing at an indexed
rate, which are in force until 31 December 2023,
implied a major effort by the Bank in the timely
preparation of IT developments, as well as in the
adaptation of operatives and documentary
support necessary to comply with DL n.º 80-
A/2022. In this context, a specific area was
created on these measures on the Bank's website
for Customers to consult all the information about

| 2022 REPORT & ACCOUNTS

98 |
them, allowing Customers to assess their
situation.
Investment solutions
The bank's activities throughout the year focused
on supporting Customers and protecting their
assets. Highlights include the launch of new 1-
year structured deposits in the second half of the
year and the adjustment of the price of time
deposits to the new reality of interest rates.
At the same time, the Bank maintained its
concern to support Customers in planning their
future, namely through Retirement solutions,
providing a wide range of PPR Funds and
Insurance.
Integrated Solutions
In 2022, a new integrated solution of banking
products and services was launched exclusively
for University student Customers aged between 18
and 25 years.
The offer of Emergency Medical Assistance
Insurance at Home was reinforced in the
Integrated Solutions “Cliente Frequente”, “Mais
Portugal”, “Millennium GO! Junior” and “Prestige
Program”, with the doctor going home free of
charge.
Possibility of telephone sales in English of all
integrated solutions with the sending of
contractual documentation also in English, thus
allowing to reach the ever-increasing universe of
foreign customers resident and non-resident in
Portugal.
ActivoBank
In 2022, ActivoBank's strategy was marked by
strong growth in the Customer base and evolution
in product penetration rates. The launch of new
products contributed to this result, such as the
Ordenado Activo offer, home loans with
advantages for young customers and car loans
with a promotional rate for people aged up to 35
years.
In 2022, new Customers capture were
approximately 70 thousand allowing to reach a
base of 460 thousand Customers.
The Customers acquired in 2022 stood out due to
the fact that they were concentrated in the 25 to
44 age group and with a high level of education.
Contributing to the expressive growth in 2022
were campaigns aimed at offers aimed at the
youth segment, supported by the core value of
the simplifies brand and the predominantly digital
experience. Of particular note was the Coach on
coach campaign, which offered coaching training
to recent graduates who opened an account with
ActivoBank.
In 2022, there was a significant growth in Digital
marketing actions, which became present in most
of the offer and consistently support the business
capture regime.
In September 2022, subscription to ActivoBank
plans was launched on the App. The AB Plus and
AB Premium plan allows ActivoBank Customers to
access a set of advantages in terms of
transaction, credit and insurance.
With regard to credit, new products were
launched with new purposes, such as EcoActivo
aimed at financing equipment with a good quality
energy class and car credit for electric vehicles.
Within the scope of investment products, the
retirement day was launched on the ActivoBank
App, offering Customers the simulation and
subscription of PPR investment funds. The
Geração Activo campaign focused on publicizing
the advantages of starting a retirement savings
plan was crucial for the commercial performance
of this business area.
In terms of investment products in 2022, 71% of
the assets under management on sale correspond
to Investment Funds that respect social and
environmental aspects, which allow providing
Customers with a comprehensive range of funds
that promote environmental and/or social
sustainability or whose investment objective is
exclusively sustainable.
In 2022, ActivoBank substantially changed its
position in the area of Sustainability, in which
sponsorship stands out, where it channeled
investment towards social and environmental
projects: the protection of the Oceans and the
fight against Cyberbullying.
Within the scope of Financial Literacy, a set of
contents was made available on the Facebook,
Youtube, Instagram, LinkedIn and TikTok channels
in the format of Conferences, webcasts or
informative videos and images, materializing the
bank's commitment to simplifying banking
concepts and approaching a discourse simple and
transparent with the Customer.
On the social front, ActivoBank carried out 11
social solidarity actions through its “Give Credits”
section of Conversas Activo. Each month, an
Association or a Social Project was chosen by
those interviewed in the program and which was
supported with an amount of up to 2,000 euros.
At the end of 2022, the personal loans portfolio
stood at 157 million euros, representing growth of
29% compared to the same period last year.

2022 REPORT & ACCOUNTS |

|99
Personal loans new production grew by around
63% compared to the same period of 2021 as a
result of greater commercial dynamics and
marketing actions.
The mortgage loan portfolio reached 676 million
euros, an increase of 30% compared to the same
period last year.
ActivoBank's net profit in 2022 stood at 19.1
million euros, which represents an increase of
41.4% compared to the net profit achieved in
2021.
Microcredit
Although the number of new companies created in
Portugal in 2022 (48,404) grew by 14% compared
to 2021 (41,656), the pre-pandemic
entrepreneurial dynamics have not yet been
resumed (49,175 in 2019). The economic situation
in Portugal, as well as the State's measures to
protect employment, preserved many jobs, not
allowing a substantial increase in the number of
unemployed people, the main recipients of this
credit instrument.
In this context, it was possible for Millennium bcp
to finance Microcredit operations during the year
2022, totalling 1,060 thousand euros in loans.
The work of promoting Microcredit is based on a
relationship with institutional partners that,
spread across the country, have direct contact
with the target audience of this instrument
(unemployed, immigrants, young people in the
end of training, etc.).

Million euros
RETAIL BANKING in Portugal | Dec 31, 2022 | Dec 31, 2021 | Chg. % 22/21
PROFIT AND LOSS ACCOUNT |  |  |
Net interest income | 547 | 448 | 22.0%
Other net income | 446 | 429 | 4.1%
| 993 | 877 | 13.3%
Operating costs | 461 | 470 | -1.9%
Impairment and provision | 66 | 76 | -12.3%
Income before tax | 466 | 331 | 40.6%
Income taxes | 145 | 103 | 39.9%
Income after tax | 321 | 228 | 41.0%
SUMMARY OF INDICATORS |  |  |
Allocated capital | 1,317 | 1,210 | 8.9%
Return on allocated capital | 24.4% | 18.8% |
Risk weighted assets | 9,463 | 10,233 | -7.5%
Cost to income ratio | 46.4% | 53.6% |
Loans to Customers (net of impairment charges) | 25,609 | 25,011 | 2.4%
Balance sheet Customer funds | 40,536 | 36,813 | 10.1%

Notes:
Allocated capital, Loans to customers (net of recoveries) and Balance sheet Customer funds figures based on average balance.
Income
As at 31 December 2022, income after tax from
Retail Banking segment of Millennium bcp in
Portugal totalled Euros 321 million, showing a 41.0%
increase compared to Euros 228 million in 2021,
reflecting an higher net operating income, a lower
level of impairment and a lower level of operating
costs recorded in 2022. Regarding the evolution of
the main income statement headings, the following
aspects should be highlighted:
•Net interest income reached Euros 547 million
as at 31 December 2022, increasing 22.0%
compared to the previous year (Euros 448
million), as a result from the higher income
arising from the loan portfolio and from the
higher income arising from the internal
placements of the excess liquidity.
•Other net income reached Euros 446 million as
at 31 December 2022, showing an increase of
4.1% compared to the amount attained in the
previous year. This evolution mainly reflects the
positive performance of commissions, mainly
from management and maintenance of accounts

| 2022 REPORT & ACCOUNTS

100 |
and transfer fees. Regarding to market-related
commissions, it should be highlighted the
commissions associated with the exchange and
brokerage transactions, which showed a
significant growth compared to the previous
year.
•Operating costs were 1.9% lower than the
amounts recognized in 2021, reflecting mainly
the decrease in staff costs as result from the
implementation of the headcount adjustment
plan that the Bank carried out in 2021.
•Impairment charges amounted to Euros 66
million by the end of December 2022,
decreasing 12.3% compared to the amount of
Euros 76 million recorded in the same period of
the previous year, reflecting the reduction of
implicit risks in the credit portfolio.
•In December 2022, loans to customers (net)
totalled Euros 25,609 million, 2.4% up from the
position at the end of December 2021 (Euros
25,011 million), while balance sheet customer
funds increased by 10.1% in the same period,
amounting to Euros 40,536 million by the end of
December 2022 (Euros 36,813 million at the end
of December of the previous year), mainly
explained by the increase in customer deposits.
COMPANIES, CORPORATE &
INVESTMENT BANKING
Millennium bcp stands in a leading position as
regards to support Portuguese companies, with a
market share of 19.3% in loans to SMEs, 18.6% in
loans to non-financial Companies and 19.8% in
deposits to non-Financial Companies.
The year 2023 was marked by the acceleration in
credit volumes, particularly in the short term,
with significant growth in Factoring and
Confirming: +25% in invoices taken, +17% in
average loans balance, +19% in contracts, + 22%
adherents and higher retention rate in SMEs.
In the Trade Finance business, Millennium bcp
continued to reinforce its position as a Partner
Bank for Exporting and Importing Companies:
•Leadership in credit to Exporting Companies,
with a 22.1% market share;
•Expansion of the Customer base with Trade
Finance products, in particular export
documentary credits, foreign allowances, export
factoring, import remittances, foreign exchange
and bank guarantees;
•More than 40% of Exporting Companies work
with Millennium bcp;
•Market share above 20% in almost all Trade
Finance products, especially documentary
credits and documentary remittances (based on
SWIFT messages);
•Strengthening of the credit insurance offer in
partnership with COSEC, with 2022 a very strong
year in contracting new policies in which the
Bank surpassed 30% in the annual new
production market share;
•Launch of a new communication campaign
dedicated to Exporting Companies, with the
motto “Transforme sucesso em success. Vamos
lá!”.
In the Business segment, continued strengthening
of skills in the management and monitoring of
Companies, in partnership with the Millennium
Banking Academy (MBA), to strengthen expertise
and capacity to respond to the needs of Business
Customers.
Leadership in Factoring and Confirming, with 10.4
billion euros of invoicing taken in 2022 and 28%
market share. Emphasis on Confirming's
leadership, with a 38% market share, and with a
year-on-year growth of 35% in invoicing taken and
38% in the average loans balance. Launch of a
new communication campaign, with the motto
“Adianta sempre vir ao Millennium” to reinforce
the positioning of the Partner Bank.
Leader Bank with 17% annual market share in the
placement of credit with mutual guarantee, in
partnership with Banco Português de Fomento
(BPF), affirming the Bank's role in supporting
Portuguese Companies and Entrepreneurs.
Availability of new support lines, with financial
guarantee provided by the BPF, with preferential
conditions in the financing of Companies.
Sustained leadership in Leasing, with 609 million
euros of new production in 2022 and 25.8% market
share with a market share of 48.9% in Real Estate
Leasing and 14% in market share in Equipment
Leasing. Launch of the Leasing Next Generation
Program to accelerate, simplify, digitize and
activate the Leasing business for all Business
Segments. Expansion of the Bank's offer using
European Investment Fund (EIF) Guarantees for
Leasing and capacity to expand business and
Customers.

2022 REPORT & ACCOUNTS |

|101
Bank #1 in the financing lines with EIF/EIB
guarantee, with the biggest contract ever in
Europe signed between the EIF and a commercial
bank. In 2022, Millennium bcp reinforced its
support for investment projects of Portuguese
companies, and more than 3,290 million euros
were disbursed, in more than 18 thousand credit
operations. Currently, the loan portfolio with EIF/
EIB guarantees amounts to 4,615 million euros in
around 25,000 loan operations.
In European Funds, Millennium bcp has led with a
45% share in Portugal 2020 and more than 6
thousand projects financed. The expertise
accumulated in the previous community
framework and the availability of a Specialized
Team in European Funds, leaves Millennium bcp
better prepared to support the economy and
Companies:
Provision of support solutions for investment
projects - advance of incentives in the
application phase, preliminary financial analysis
with declaration of financing intention, financing
of borrowed capital, issuance of bank guarantees
for the anticipation of incentives and Factoring
and Confirming solutions to anticipate the
revenues on Customers and/or payment to
suppliers.
Portugal 2020 - as part of the support for
companies with applications and investment
projects approved under the Portugal 2020
Programme, new funding was granted, with
reinforced leadership in the number of supported
projects.
SI Inovação - reinforcement of leadership as Bank
#1 in the choice of Companies in the new notices
of SI Inovação, with option for the hybrid
financing system.
The Recovery and Resilience Plan (RRP) will run
until 2026 and will implement a set of reforms
and investments aimed at restoring sustained
economic growth, reinforcing the objective of
convergence with Europe over the next decade.
With the RRP as a central theme, Millennium has
promoted in 2022 and will continue to promote in
2023, throughout the country, the Millennium
Talks, an initiative of proximity and sharing of
experiences with Portuguese Entrepreneurs.
In the main business recognition programmes,
Millennium bcp has been consolidating market
leadership in the business segments:
•Standing out in the PME Líder Program, for the
5th consecutive year, with a 32% market share,
supporting more than 3,500 Companies to
achieve this business status.
•Standing out in the Programa Inovadora COTEC,
for the 2nd consecutive year, with a 61% market
share, supporting more than 360 Companies to
achieve this business status.
•Continued recognition of Business Customers,
who consider Millennium bcp the Best Corporate
Bank, the Closest Bank, the Main Bank, the Most
Innovative Bank and with the Most Appropriate
Products (Study BFin Data-E 2022).
Improvement in the recommendation and
satisfaction indices, with the best results ever in
Customer surveys, in all business segments.
Proximity to the primary sector, with a
Specialized Team dedicated to
Agriculture
Line of credit to support the Fishing sector, filed
with IFAP, to finance the treasury of natural or
legal persons active in the fishing, aquaculture,
processing industry and marketing of fishery
products.
Investment banking
In Corporate Finance, the Bank participated in
several projects in Portugal and in the
international markets, providing financial advisory
to its customers and to the Bank itself in various
projects, involving researching, developing and
completing M&A transactions, valuation of
companies, corporate restructuring and
reorganization processes, as well as research and
economic-financial analysis of projects. In
Mergers & Acquisitions, we should highlight the
assistance to Encosta da Parede project’s
promoters in the sale of a minority stake in the
project and in raising mezzanine financing as well
as the advisory to Teixeira Duarte in the disposal
of Bonaparte, the owner of Shopping Cidade do
Porto.
Millennium investment banking has been
increasing its Project Finance activity, especially
in the renewable energy sector. We highlight in
2022, the closing of 3 wind farms portfolios, the
refinancing of a portfolio of mini-hydro power
plants and the financing of the construction of 5
solar photovoltaic parks with an installed capacity
of 262 MW.
In what regards Structured Finance, we highlight
the analysis, structuring and negotiation of new
financing transactions in Portugal in diverse
segments, namely agribusiness, industry,
metallurgic, utilities, renewable energy, real
estate, healthcare, retail and distribution,
pharma, hotels and tourism. Despite 2022’s
economic instability, it is particularly noteworthy
the successfully closing of Grupo Pestana medium
long term financing and the syndicated term loans
to Fundo de Recuperação Turismo, Fundo de
Capital de Risco and to FLIT – PTREL, SICAV-SIF,
S.C.A..
In the Debt Capital Markets, we note the joint
lead of the €1,250 million green bond issued by

| 2022 REPORT & ACCOUNTS

102 |
EDP, the two bond issues by the Autonomous
Region of Madeira guaranteed by the Republic of
Portugal totalling €485 million and the €455
million issued by the Autonomous Region of
Azores. The Bank also acted as Joint Global
Coordinator for two public bond offers: Mota-Engil
Sustainability-linked Bonds (€70 million) and
Greenvolt Green Bonds (€150 million), the latter
being the first Green Bond public offer to retail
investors in Portugal. We led several new
commercial paper programs for relevant
Portuguese corporates, among which the €100
million Sustainability Linked Commercial Paper
Program for NOS and the €100 million Green
Commercial Paper Program for REN.

2022 REPORT & ACCOUNTS |

|103

| 2022 REPORT & ACCOUNTS

104 |
Real estate business
Main lines of action during 2022:
Management of properties available for sale – In a
year in which new conditions emerged for the real
estate business, the Bank was able to find solutions
and adapt its commercial strategy with very
positive results, surpassing all the objectives set for
2022 in this area. Thus, based on the confidence
conveyed for good decision-making by the
Customer, the Bank increased its proximity to the
market and its agents managing to lead and
interact more with purchase decision-makers,
significantly reducing its portfolio of available
assets for sale, while defending their value and
disposing of assets with a long age in the portfolio,
increasing the Bank's direct sales.
Management of Properties not available for sale –
The continuous improvement of processes, the
complementarity and aggregation of services, in the
reception, physical, documents and legal
regularization of the properties contributed to the
satisfaction of the objectives, which is to put the
properties on sale in the shortest possible time.
Management of shareholdings controlled by the
Bank in Entities that manage real estate risk, Funds
and Companies.
Interfundos
As at 31 December 2022, Interfundos managed
twenty-three (23) Real Estate Investment
Organizations (Real Estate Investment Funds and
Fixed Capital Real Estate Investment Companies),
corresponding to 1,051 million euros of net assets
under management, which compares with 1,181
million euros registered in the same period of 2021,
showing a decrease of 10.93% in the volume of
managed assets compared to the same period of
the previous year. This asset ensures Interfundos a
market share of 8.9% in all Real Estate Investment
Organisations.
Interfundos pursued its strategy of reinforcing the
financial sustainability of Real Estate Investment
Organizations and creating liquidity conditions for
Participants and Shareholders, a situation
evidenced by the completion of capital increase
operations in three Real Estate Investment Funds
(Oceânico III, Sand Capital and Predicapital) and
capital reduction in six Real Estate Investment
Funds (Imopromoção, Neudelinveste, Imoal, Renda
Predial, Imosotto and Imorenda).
Interfundos also liquidated a Real Estate Investment
Fund (Neudelinveste), transferred the management
of a Real Estate Investment Fund (Imotur) and
Multi24, Sociedade Especial de Investimento
Imobiliário de Capital Fixo, SICAFI, S.A., changed its
shareholder structure.
Following resolutions by the respective
Participants, Interfundos extended the duration of
two Fixed-term Real Estate Investment Funds
(Imopromoção and Sand Capital).
In 2022, global sales amounted to 139 million euros,
corresponding to a total of 382 properties.
Interfundos' net income in 2022 amounted to 2,084
thousand euros, which corresponds to a decrease of
17.7% compared to the figure in 2021 (2,531
thousand euros). This performance is mainly
attributable to the unfavourable evolution of net
commissions, resulting from the reduction of 129
million euros in assets under management and the
increase in staff costs.
Financial Institutions Group (FIG)
Correspondence banking activity and the business
lines managed by the FIG were heavily impacted by
changes in context, namely by the change in the
ECB's monetary policy and by the geopolitical
tensions resulting from the war in Europe.
Trade finance: The year was particularly full of
events with a major impact on correspondence
relations and on the international business of BCP's
Customers.
On the one hand, continuation of the reorganization
of production and distribution chains, with the
emergence of new opportunities in foreign markets,
in a process that became evident with the
pandemic and deepened with the geopolitical
tensions resulting from the war in Ukraine.
On the other hand, the return of inflation and the
subsequent response in terms of monetary policy,
which resulted in the end of the commissions
applicable to liquidity-providing operations in the
form of deposits in euros and a return, already in
the second half of the year, of the positive margin
on balance sheet resources in euros. These two
factors “normalised” the way income is generated
(eliminating the cost of deposits in euros).
In addition, the Bank had to accommodate a more
demanding regulatory and sanctions framework,
maintaining the creation of value for Customers
based on the offer of efficient payment solutions
and instruments for mitigating the risks of
international business (Trade Finance) under
competitive conditions and with global coverage. In
this domain, reference should be made to the
pioneering adherence in the national market to the
Global Payments Innovation (GPI) and the ongoing
transition to the new SWIFT ISO20022 message
standard, which will reinforce the role of
correspondence relationships in the international
payment system, making them even more fast,
efficient, accessible and transparent.
Custody: Institutional custody activity continued to
be a reference service in the national market and

2022 REPORT & ACCOUNTS |

|105
with growing importance in its different segments.
Particular reference should be made to the
provision of depositary bank services to venture
capital fund management companies, where the
Bank strengthened its leadership in the national
market, with an increase in the number of funds
and a new increase in total paid-in capital. This
performance is the result of a value proposal based
on a flexible service model, with follow-up and a
customized offer along with very competitive
conditions.
Multilateral lines: The challenges of this period
also made evident the advantages of BCP being a
reference bank in the negotiation of financial
products and instruments with multilateral lines.
The negotiation of risk mitigation instruments with
the EIB/FEI Group was particularly critical in the
response to the crisis caused by the pandemic, with
a clear benefit in the financing conditions for
national companies. In this framework, the Bank
maintained a close monitoring of new initiatives,
namely under the InvestEU Programme, in order to
give continuity to an effective and sustainable
response in the various domains and business
segments.

| 2022 REPORT & ACCOUNTS

106 |

Million euros
COMPANIES, CORPORATE & INVESTMENT BANKING in Portugal | Dec 31, 2022 | Dec 31, 2021 | Chg. % 22/21
PROFIT AND LOSS ACCOUNT |  |  |
Net interest income | 263 | 259 | 1.4%
Other net income | 169 | 146 | 16.0%
| 432 | 405 | 6.7%
Operating costs | 103 | 111 | -7.4%
Impairment (excluding the impairment related to NPE in the beginning of the year) | 60 | 94 | -35.9%
Income before tax (excluding impairment charges for NPE) | 269 | 200 | 34.3%
Impairment charges for NPE | 122 | 58 | 112.0%
Income before tax | 147 | 143 | 2.9%
Income taxes | 46 | 45 | 2.4%
Income after tax | 101 | 98 | 3.2%
SUMMARY OF INDICATORS |  |  |
Allocated capital | 1,083 | 1,243 | -12.9%
Return on allocated capital | 9.3% | 7.9% |
Risk weighted assets | 7,767 | 10,653 | -27.1%
Cost to income ratio | 23.8% | 27.5% |
Loans to Customers (net of impairment charges) | 11,885 | 12,077 | -1.6%
Balance sheet Customer funds | 10,580 | 9,289 | 13.9%

Notes:
Allocated capital, Loans to customers (net of recoveries) and Balance sheet Customer funds figures based on average balance.
Income
Companies, Corporate and Investment Banking
segment in Portugal income after tax of Euros 101
million in December 2022, compared favourably to
a net income of Euros 98 million presented in
December 2021. The favourable performance of this
segment results from a higher net operating income
and a lower level of operating costs recorded in
2022. However, these results remain constrained by
the progressive implementation of non-performing
exposures reduction plan, with an impact on the
volumes of the loan portfolio and on its levels of
impairment charges. In 2022 the performance of
this segment is explained by the following changes:
•Net interest income stood at Euros 263 million
as at 31 December 2022, 1.4% above the amount
attained in the previous year (Euros 259
million). The income arising from the loan
portfolio benefited essentially from a
favourable interest rate environment, more
than offset the increase of the cost of internal
funding and the increase of the remuneration of
deposits, mostly due to increase of the volume
of time deposits portfolio, having more than
doubled.
•Other net income reached Euros 169 million in
December 2022, being 16.0% higher compared
to the amount achieved in December 2021,
which is mainly explained by the positive impact
on net fees and commissions, with emphasis on
the commissions from transfer fees and cards.
•Operating costs totalled Euros 103 million by
the end of December 2022, 7.4% below the
overall amount of costs recorded in the same
period of the previous year.
•Impairments charges recorded Euros 182 million
in December 2022, increasing from Euros 151
million in the same period of 2021, whose
evolution is explained by the impairment
charges related to the non-performing
exposures, as the Bank significantly reduces
legacy exposures.
•As at December 2022, loans to customers (net)
totalled Euros 11,885 million, decreasing 1.6%
from the position in December 2021 (Euros
12,077 million), reflecting the Bank's positive
performance in reduction of the non-performing
exposures, partially compensated by the growth
of the commercial paper. Balance sheet
customer funds reached Euros 10,580 million,
13.9% above the amount recorded in December
2021, particularly through the expansion of the
client’s deposits base.

2022 REPORT & ACCOUNTS |

|107
PRIVATE BANKING
In a context of uncertainty and instability, the
continued focus on the culture of proximity
between Private Bankers and Customers
proved to be of vital importance, ensuring the
constant monitoring of Customers' assets and
keeping them informed of market
developments. To this end, the evolution in
the service provided to execution Customers
through the Investment Center contributed
significantly, which reinforced the network's
short-term vision on the markets.
In Millenium private banking, 2022 was also
marked by a commitment to the "First Bank"
concept, that is, to promoting the Bank as the
main Bank of each Customer, insofar as
Millennium bcp's Private intends to be the
Customers' partner not only in the
management of their financial investments,
but also in their day-to-day management.
The promotion of digital channels among
Customers who had not yet adhered to digital
solutions remained on the agenda, as well as
increasing transactionally through these
channels, as the intensive use of remote
channels and digital tools will certainly
continue to be a key component of the
business success and commercial relationships
will be a symbiosis between Digital and Human
channels, designed to maximize the quality of
service to the Customer.
It should be noted the continuous growth
recorded in the number of active Customers
with the Millennium App installed, in the
number of users of the Millennium website, of
those adhering to the digital statement and in
the number of Customers with Mtrader
installed, as well as the promotion of the
remote investment hubs of the Millennium App
within the Customer base.
Without neglecting the relationship of trust
existing between Private Bankers and
Customers, the Bank continued to focus on:
•in improving the quality of the service
provided through the adoption of new tools
suited to the challenges imposed by the
diversification of the offer and type of
Customer;
•strengthening the Customer base;
•in the growing diversification of Customer
assets;
•in cross-selling;
•in the increase of the net interest income;
•in credit management and growth;
•in the management of the stock of deposits.
The year 2022 was also marked by the return
of face-to-face events with Customers.

| 2022 REPORT & ACCOUNTS

108 |

Million euros
PRIVATE BANKING in Portugal | Dec 31, 2022 | Dec 31, 2021 | Chg. % 22/21
PROFIT AND LOSS ACCOUNT |  |  |
Net interest income | 9 | 4 | 94.3%
Other net income | 43 | 36 | 20.7%
| 52 | 40 | 28.7%
Operating costs | 21 | 21 | 1.3%
Impairment and provision | -1 | -3 | -80.2%
Income before tax | 32 | 22 | 40.1%
Income taxes | 10 | 7 | 39.2%
Income after tax | 22 | 15 | 40.5%
SUMMARY OF INDICATORS |  |  |
Allocated capital | 87 | 78 | 11.6%
Return on allocated capital | 24.5% | 19.4% |
Risk weighted assets | 700 | 667 | 4.8%
Cost to income ratio | 41.3% | 52.5% |
Loans to Customers (net of impairment charges) | 344 | 344 | —%
Balance sheet Customer funds | 2,867 | 2,721 | 5.4%

Notes: Allocated capital, Loans to customers (net of recoveries) and Balance sheet Customer funds figures based on average balance.
Income
Income after tax from Private Banking business in
Portugal, computed according to the geographic
segmentation perspective, totalled Euros 22
million in December 2022, showing an increase of
40.5% compared to the net profit reached in the
same period of 2021 (Euros 15 million).
Considering the performance of the main items of
the income statement, the relevant situations are
highlighted as follows:
•Net operating revenues stood at Euros 52
million in December 2022, 28.7% up from the
same period of the previous year (Euros 40
million), achieved by the growth shown both
in other net income and in net interest
income. Net interest income totalled Euros 9
million in December 2022, comparing to Euros
4 million reached in December 2021,
benefiting from the higher income arising from
the internal placements of the excess
liquidity. Other net income amounted to Euros
43 million in December 2022, reflecting an
increase of 20.7% compared to the same
period of the previous year, mainly driven by
higher commissions from asset management
activity, from exchange and brokerage
transactions and transfer fees.
•Operating costs amounted to Euros 21 million
in December 2022, being 1.3% above the
operating costs recorded in December 2021.
•The impairment and provision charges
recorded a favourable impact in the income
statement both in December 2022 (Euros 1
million) and in December 2021 (Euros 3
million).
•Loans to customers (net) amounted to Euros
344 million by the end of December 2022,
showing a null growth compared to figures
accounted in the same period of the previous
year, while balance sheet customer funds
grew 5.4% during the same period, from Euros
2,721 million in December 2021 to Euros 2,867
million in December 2022, mainly due to the
increase in customer deposits.

2022 REPORT & ACCOUNTS |

|109
FOREIGN BUSINESS AND OTHERS
Poland
•Net income of -216.7 million euros, mainly
influenced by costs related to CHF mortgage
porfolio 13 as well as by credit holidays 14.
•Adjusted net income 15 up by 99.3% with an
adjusted ROE of 21.5%.
•In Q422, Bank Millennium's results amounted to
+53.2 million, after several quarters with
negative results.
•Net operating income growth influenced by net
interest income increase by 71.8%.
•Operating costs increased 11.3% excluding
contributions.
•Adjusted 16 cost/income ratio of 36.2% and
stated cost/income ratio of 39.3%.
•Customers funds increase by 4% and decrease of
loans to Customers by 2.5%.
•NPL>90d accounted for 2.0% of total loans as of
December 2022 (2.2% as of December 2021).
•Coverage of NPL>90d by loan-loss reserves at
157% (135% as of December 2021).
•Cost of risk of 44bp, compared to 37bp in 2021.
•At the end December of 2022, accumulated
provisions for the portfolio originated by Bank
Millennium were at the level of PLN 4,986
million, EUR 1,065 million (equivalent to 46.8%
coverage of the grossed-up FX-mortgage book).
Provisions for the portfolio originated by
EuroBank amounted to PLN 409 million (EUR 87
million) at the end of 2022.
•In 4Q22, capital ratios improved markedly,
returning to levels above the minimum
requirements.
•CET1 ratio of 11.3% and total capital ratio of
14.4%, above the minimum requirements (8.3%
and 12.7% respectively). To be highlighted that
minimum required ratios for Bank Millennium
were lowered by the regulator during 4Q22, as a
result of the reduction of the P2R buffer in
December’22.
Mozambique
•Net income of 101.9 million in 2022, +6.6% on
comparable basis 17.
•Banking Income increased by 9.6% in 2022,
excluding the exchange rate effect, benefiting
from the 9.9% growth in net interest income and
7.1% in commissions, excluding the exchange
rate effect.
•Operating costs increased by 7.2%, excluding
currency effects, in 2022.
•Stated cost/income ratio decreased from 43.5%
in 2021 to 42.6% in 2022.
•Customer funds increased by 10.2%; loans to
Customers increased by 2.1%.
•NPL>90d ratio of 8.2% as of December 2022,
with coverage by loan-loss reserves of 98% on
the same date.
•Cost of risk of 118bp in 2022 (72bp in 2021).
•Capital ratio of 36.4%.
Macao 18
•Net income amounted to 16.6 million euros in
2022, an increase of 27% compared to the same
period of the previous year, mainly due to the
increase in net interest income (+18.6%) and
gains on financial operations and commissions (+
15.7% ), which more than offset the increase in
operating costs (+23.7%), mainly due to the
increase in the number of Employees at the
branch.
•The branch's performance as a support platform
for the business of Portuguese companies in
Macau and mainland China.
•Trade finance operations to support Portuguese
companies with exports to and/or imports from
China.
•Acquisition of trading companies with
international trade operations with China.
•Attracting Chinese Customers wishing to invest
in Portugal, either individually or at a corporate
level.
•Promotion of contacts between Millennium bcp's
investment banking area and Chinese companies
in the search for investment solutions in
Portuguese-speaking countries.

| 2022 REPORT & ACCOUNTS

110 |
13 525.6 million before taxes.
14 282.8 million before taxes.
15 Excludes FX-mortgage legal risk provisions, costs of litigations and settlements with Clients, credit holidays and with linear distribution of BFG
resolution fund fee and hypothetical bank tax in H2’22; In 2021 also material revaluation of financial investments (VISA).
16 Extraordinary items: FX-mortgage related costs, cost of credit holidays and with linear distribution of BFG resolution fund fee and hypothetical bank tax
in 2H22; in 2021 also material revaluation of financial investments (VISA); ROE: Equity adjusted by FX related costs.
17 Not including results arising from discontinued operations.
18 For the purpose of the computation of the net income generated by business segments, Macao activity is included in the "Other" segment, since it is
carried out through a branch.

Milhões de euros
Poland | Dec 31, 2022 | Dec 31, 2021 | Chg. % 22/21
PROFIT AND LOSS ACCOUNT |  |  |
Net interest income | 996 | 595 | 67.4%
Other net income | 24 | 115 | -79.0%
| 1,020 | 710 | 43.7%
Operating costs | 357 | 330 | 8.1%
Result on modification | -310 | — |
Impairment and provision | 509 | 599 | -15.0%
Income before tax | -156 | -219 | -28.9%
Income taxes | 61 | 73 | -16.4%
Income after income tax | -217 | -292 | -25.8%
BALANCE SHEET |  |  |
Loans to Customers (net of impairment charges) | 16,356 | 17,206 | -4.9%
Balance sheet Customer funds | 20,941 | 19,962 | 4.9%
Note: The accounts presented are in accordance with the Consolidated Accounts of the Group, and there may be differences in relation to the accounts disclosed locally.

Milhões de euros
Mozambique | Dec 31, 2022 | Dec 31, 2021 | Chg. % 22/21
PROFIT AND LOSS ACCOUNT |  |  |
Net interest income | 202 | 159 | 26.8%
Other net income | 64 | 51 | 25.3%
| 266 | 210 | 26.5%
Operating costs | 113 | 92 | 23.7%
Impairment and provision | 15 | 14 | 6.4%
Income before tax | 138 | 104 | 31.6%
Income taxes | 36 | 22 | 63.9%
Income after tax from continuing operations | 102 | 82 | 23.0%
Income from discontinued operations | 4 | 19 | -79.7%
Income after income tax | 106 | 101 | 4.1%
BALANCE SHEET |  |  |
Loans to Customers (net of impairment charges) | 628 | 574 | 9.4%
Balance sheet Customer funds | 2,232 | 1,894 | 17.8%
Note: The accounts presented are in accordance with the Consolidated Accounts of the Group, and there may be differences in relation to the accounts disclosed locally.

2022 REPORT & ACCOUNTS |

|111

Million euros
FOREIGN BUSINESS | Dec 31, 2022 | Dec 31, 2021 | Chg. % 22/21
PROFIT AND LOSS ACCOUNT |  |  |
Net interest income | 1,199 | 757 | 58.3%
Other net income (*) | 87 | 164 | -46.7%
| 1,286 | 921 | 39.7%
Operating costs | 471 | 423 | 11.5%
Result on modification | -310 | — |
Impairment and provision | 632 | 622 | 1.6%
Income before tax | -127 | -124 | 2.7%
Income taxes | 97 | 95 | 2.3%
Income after tax from continuing operations | -224 | -219 | 2.5%
Income from discontinued operations | 6 | 71 | -92.2%
Income after income tax | -218 | -148 | 47.9%
SUMMARY OF INDICATORS |  |  |
Allocated capital (**) | 2,036 | 2,784 | -26.9%
Return on allocated capital | -10.8% | -5.3% |
Risk weighted assets | 16,821 | 16,646 | 1.1%
Cost to income ratio | 36.6% | 45.9% |
Loans to Customers (net of impairment charges) | 16,983 | 17,780 | -4.5%
Balance sheet Customer funds | 23,173 | 21,856 | 6.0%

(*) Includes equity accounted earnings related to the investment in Banco Millennium Atlântico.
(**) Allocated capital figures based on average balance.
Income
Income after tax from Foreign Business, computed
in accordance with the geographic perspective,
posted losses of Euros 218 million in December
2022, comparing unfavourably with a loss of Euros
148 million achieved by the end of December 2021.
This evolution is mostly explained by the result on
modification and by lower other net income,
despite of the positive performance of the net
interest income.
Considering the different items of the income
statement, the performance of Foreign Business can
be analyzed as follows:
•Net interest income stood at Euros 1,199 million
in December 2022, which compares to Euros 757
million achieved in December 2021. Excluding
the impact arising from the foreign exchange
effects, it would have increased 56.4%,
reflecting the favourable performance of the
Polish subsidiary, boosted by successive
increases in the reference interest rates that
have been taking place since the last quarter of
2021 and the third quarter of 2022, ending the
period of interest rates close to zero that had
been set by the National Bank of Poland since
the initial phase of the pandemic and which had
been penalizing the net interest income of the
subsidiary. The positive performance of the net
interest income in the Mozambican operation
benefited from the increase in the interest
rates.
•Other net income attained Euros 87 million in
December 2022, decreasing when compared to
the Euros 164 million recorded in the same
period of the previous year. Excluding foreign
exchange effects, other net income would have
decreased 48.0%, reflecting mainly the
performance of the Polish subsidiary, in
particular the impact of higher costs with
mandatory contributions, highlighting the
contribution to the Polish Institutional
Protection Scheme, non-existent in 2021, and
also the impact observed in the net trading
income, mostly related to the revaluation of
Visa shares, as income from the loan portfolio
mandatorily classified at fair value through
profit or loss also recorded a drop in relation to
the amount accounted in the previous year.
Inversely, the positive performance of the
Mozambican subsidiary should be highlighted,
with emphasis for the commissions, mainly from
cards and transfer fees, for the higher gains

| 2022 REPORT & ACCOUNTS

112 |
arising from foreign exchange transactions
carried out with customers and for the
contribution of Seguradora Internacional de
Moçambique, S.A. on equity accounted earnings.
•Operating costs amounted to Euros 471 million
as at 31 December 2022, 11.5% up from
December 2021. Excluding foreign exchange
effects, operating costs would have increased
10.0%, mostly influenced by the evolution of the
subsidiaries in Poland and Mozambique. The
Polish subsidiary showed an increase in staff
costs that was determined by the strong
pressure on basic wages, resulting both from
rising levels of inflation and from the
characteristics of the Polish labour market,
particularly from the very low unemployment
rates, while at the level of other administrative
expenses, the growth shown reflected the above
mentioned effect of inflation. Regarding the
Mozambican subsidiary, the increase in
operating costs was due, among others, to the
salary update and the general increase in prices.
•Result on modification results mainly from the
amount associated to potential costs arising
from the moratorium program in Poland (credit
holidays), reclassified from other impairments
and provisions. This item also includes results of
contractual modifications, namely, costs arising
from negotiations with customers holding
mortgage loans in foreign currency, hitherto
accounted for in other impairments and
provisions (the amounts referring to 2021, based
on their immateriality in this context, were not
restated).
•Impairment and provision charges at the end of
December of 2022 presented a marginal growth
compared to the figures reported in the same
period of 2021, corresponding essentially to the
impact of the total impairment of the goodwill
associated with the acquisition by the BCP
Group of the percentage of control over the
Polish operation (Euro 102 million), partly
compensated by the lower level of extraordinary
provision charges for legal proceedings related
to mortgage loans granted in Swiss francs,
booked by the Polish subsidiary, amounting to
Euros 431 million (Euros 505 million in the same
period of 2021).
•Results from discontinued operations include
the net income generated by the current
activity of Banque Privée BCP (Suisse) SA, and
Seguradora Internacional de Moçambique, S.A.
as at 31 December 2021. In 2022, results from
discontinued operations reflects the adjustment
to the sale price, in accordance with the sale
agreements, following the completion of these
sales.
•Loans to customers (net) stood at Euros 16,983
million at the end of December 2022, below the
amount attained as at 31 December 2021 (Euros
17,780 million). Excluding foreign exchange
effects, the loan portfolio decreased 2.7%, due
to the contribute of the Polish subsidiary. The
Foreign business’ balance sheet customer funds
increased 6.0% from Euros 21,856 million
reported as at 31 December 2021 to Euros
23,173 million as at 31 December 2022.
Excluding the foreign exchange effects, balance
sheet customer funds increased 7,4%, mainly
driven by the performance of the subsidiary in
Poland.

2022 REPORT & ACCOUNTS |

|113
BANCASSURANCE BUSINESS
Sale of Insurance through the
banking channel
During 2022, continuity was given to the
defined strategic objectives and ongoing
projects, which made it possible to strengthen
the partnership in the sale of insurance
through the banking channel (Bancassurance),
with the following highlights:
•Continuity of the Bancassurance Next Level
programme, involving teams from the Bank
and the Insurance Company, with a focus
on innovation and disruptive
transformation of business models and
processes;
•Launch of innovative products, namely the
new Volta e Volta 55+ Personal Accidents
insurance, Forte Life Insurance for Serious
Illnesses, Médis Light Health Insurance,
Cyber Risk Companies Insurance, the
revamp of the product for pets – Pétis -
leveraged on the launch of Ecossistema
Pétis and the integrated provision of Multi-
risk Home Insurance to Customers who
take out Home Loans;
•Reinforcement of the presence on the
Digital channel, with the broadening of the
range of products available on the App
(Retirement Savings Products associated
with Personal Loans, Active Retirement
PPR and the possibility of adding Insured
People aged 18+ to Médis policies);
•Commitment to initiatives focused on the
Digital channel, offering gifts and vouchers
in specific campaigns for subscriptions
made via the website, App and various
campaigns on social networks;
•For the Companies Segment, optimizing
insurance sales processes and approaches
and increasing its internal and external
disclosure.

| 2022 REPORT & ACCOUNTS

114 |
Strategic Plan 2021-2024

The Strategic Cycle launched in 2021 reflects its determination to accelerate
Millennium’s development so that it’s in a strong position for the future, ready to face
and overcome the challenges that are shaping both the macro-economic environment and
the competitive landscape for banking.
Successfully executing on the priorities and key
levers of Millennium’s previous Strategic Plan Cycle
was crucial for setting the bank on a solid
normalization path by significantly reducing its
legacy exposures. It also laid important foundations
for the future by a substantial acceleration in the
Bank’s level of digitization.
This trajectory was particularly influenced by
developments in Portugal (a 40% reduction of NPEs
compared to 2018 and mobile customers up by 48%
in 2020) where the bank managed to recover its
volume growth trend (~5% p.a. growth in lending
and deposits over 2018-20) and increase its share of
revenues (+0.6pp in 2018-20) in an environment of
margin compression and continued low interest
rates.
This progress was impacted by the pandemic which
has, inter alia, raised credit risk levels. In Poland,
moreover, despite a positive operational
performance and the swift integration of EuroBank,
the bottom-line result was hindered by negative
developments in FX mortgages (despite the bank
having stopped writing new FX mortgages in 2008).
Going forward, the bank faces an environment of
economic turmoil, with the prospects of recovery
on the immediate horizon promising growth
opportunities but with associated risks of
continued low interest rates and thus an inherent
challenge to profitability. Greater customer
expectations, more digital and e-commerce
activity, the increasing threat of tech platforms and
digital attackers and the overriding requirement of
sustainability will together present significant
challenges but also major opportunities.
The Bank’s profitability performance is also
constrained by legislative developments in Portugal
in relation to contributions to the National
Resolution Fund and limitations regarding fair
commissions and fees.
In this context, it’s necessary to update our
strategic plan, and for the moment focus more on
Portugal. This update is designed to preserve
relevant priorities from the previous cycle, build on
what’s already been achieved and add new
elements that respond to this new environment.
The new plan targets Millennium with achieving
robust profitability and balance sheet positions and
managing the impact of the pandemic while
accelerating its competitive differentiation in
efficiency and customer engagement levels,
supported by targeted human touch and new
mobile/digital solutions and business models,
enabled by a highly skilled and effective talent
base, while at the same time addressing societal
sustainability challenges with a focus on climate
change risks and the opportunities that may unfold
in mitigating them.
The main strategic priorities for Millennium in
Portugal have been set out for this new Cycle,
preserving a balance between continuity and bolder
moves to reinforce its competitive edge and
innovation:
Serving the financial and protection needs of
customers with personalized solutions which
combine targeted human touch with a leading
mobile platform: aiming to expand relevance and
develop high engagement relationships that
empower our customers in their financial lives.
This priority is about serving customers in meeting
all of those profitable retail needs in which
Millennium holds a leadership position: investment
management, bancassurance and personal lending
solutions.
Being a trusted partner for corporate recovery and
transformation: supporting customers’ pursuit of
opportunities driven by EU funding to the economy
(PRR, PT 2030), while enabling solutions fit for a
more digitized, competitive and export-oriented
corporate landscape.
Capital and risk resilience: reinforcing our balance
sheet and ensuring readiness for the post-pandemic
world, strengthening both our risk and capital
management practices.
Best in class efficiency: realizing cost savings
enabled by productivity gains already achieved
in the previous Cycle by several transformational
changes including the full exploitation of mobile
and automated capabilities, increased efficiency in
the branch network and tech and data-driven
process reengineering and automation.

2022 REPORT & ACCOUNTS |

|115
Data and technology edge: focusing efforts on
the implementation of our next-generation data
platform while scaling advanced analytics models
to gain differentiating mass personalization
capabilities, intelligent automation and informed
and agile business and regulatory management. In
parallel, the Bank will expand the deployment of its
new technology foundations by advancing its cloud
platform, using modular IT building blocks
augmented by the digital experience platform and
new cybersecurity solutions, designed to deliver
agility and speed to market, scale, resilience and
cost efficiency.
Capability building and talent renewal: reinforcing
Millennium’s ability to attract, develop and retain
the best talent to embrace modern challenges in
critical domains and adapt working practices to
reflect the new paradigm while promoting an equal-
opportunity environment.
Sustainability-driven: adapting our business model
to increase differentiation towards the
community’s and our customers’ rising expectations
of sustainability while capturing associated business
opportunities as well as addressing regulatory
demands.
Finally, Millennium’s innovation efforts will enable
the bank to explore broader opportunities, going
beyond traditional banking, not only in order to go
on delivering a superior customer experience but
also to support our income growth and cost-
containment goals.
The execution of these priorities for Portugal will
be combined with ongoing efforts to explore
prudently the full growth potential of our
international operations, continuously looking for
ways to optimize their footprint.
This will enable Millennium to deliver against a set
of bold targets for 2024. The Group aspires to
improve C/I (to ~40% in 2024) and profitability
(aiming at a ROE of ~10%). In parallel, Millennium
will focus on risk management, aiming to
significantly lower the cost of risk (to ~50 bps) and
the NPE ratio (to ~4%), while keeping a prudent CET
1 ratio (>12.5%).
Additionally, there will be continued investment in
increasing our mobile penetration (from 48% to
more than 65%) and maintaining our leading digital
customer satisfaction (#1 in digital NPS).

| 2022 REPORT & ACCOUNTS

116 |
Targets for 2024
The new Strategic Plan Cycle aims to speed up Millennium’s transition to a position of
strength and readiness for the future in Portugal, notwithstanding the risks that shape
the macro-economic environment and the competitive landscape.
Our aspiration can be synthesised as:
i) Achieving robust profitability and a strong
balance sheet position, managing the impact of the
pandemic;
ii) accelerating BCP's competitive differentiation in
efficiency and customer engagement, supported by
targeted human touch, mobile/ digital solutions
and in business models supported in a talent base of
excellence;
iii) addressing societal sustainability challenges
focusing on climate change risks and the associated
unfolding opportunities.
In the international business, Millennium will
continue the journey started in 2018, making
adjustments in the face of recent developments. In
Poland, where it is implementing a resilience plan,
the focus is on responding to the risks of exposure
to mortgage loans in Swiss francs, actually reducing
the need for provisions for this risk, ensuring the
continued development of the commercial franchise
and Customer satisfaction. In Mozambique, it will
continue to adapt the business model to improve
the service and respond to the evolving needs of
Customers, maintaining a strong commitment to
profitability, efficiency and the model of risk
control.
The successful execution of BCP's strategic
priorities will reinforce its franchise position and
business model sustainability.
By 2024, the Group’s bold ambition is to improve C/
I to ~40% and to grow ROE profitably to ~10%. In
parallel, Millennium will focus on risk management,
with the goal of reducing the cost of risk (to ~50
bps), its NPE ratio (to ~4%) and a prudent objective
for the CET 1 ratio (>12.5%). Finally, there will be a
continued investment around rising levels of mobile
penetration (from 48 to >65%) and a focus on
delivering leading digital Customer satisfaction.

2022 REPORT & ACCOUNTS |

|117
Ambitious goals aligned with strategic priorities — Group level

| 2022 | 2024
C/I ratio | 37% | ~40%
Cost of risk | 52 bp | ~50 bps
ROE | 4.0% | ~10%
CET1 ratio | 12.5% (13.0% proforma***) | >12.5%
NPE ratio | 3.8% | ~4%
Share of mobile customers | 63% | >65%
Growth of high engagement customers* (vs. 2020) | +10% | +12%
Average ESG rating** | 69% | >80%

*Active Customers with card transactions in the previous 90 days or funds > €100 (>MZM 1,000 in Mozambique)
**Average of Top 3 indices (DJSI, CDP and MSCI) | NPE include loans to Customers only.
***Pro forma(subject to ECB authorization, meanwhile obtained in March 2023) considering the already requested
approval (ECB) for the application of article 352 (2) CRR (Capital Requirements Regulation) that excludes from
capital requirements the structural FX positions held to hedge the capital ratios.

| 2022 REPORT & ACCOUNTS

118 |
Risk and Outlook

2022 REPORT & ACCOUNTS |

|119
Internal Control System

The internal control system governance model encompasses the organizational structure, the lines of
reporting and levels of authority, the set of lines of responsibilities and processes, that result from the
applicable laws and regulations, as well as the Bank’s by-laws and internal regulations, to ensure a prudent
and effective management of the Bank and adequate checks and balances.
The governance model promotes a conduct and risk culture across all the areas of the Bank, which is
materialized in an overarching set of principles, strategies, policies, systems and functions.
The Board of Directors promotes a strong governance and internal control culture, embedded in all levels of
the organization, and based on high standards of ethical behaviour, with rules established in the Code of
Conduct, available in the Bank’s site.
The Board of Directors provides the Bank’s governance, guidance and oversight and sets the broad strategies
and major policies of the organization, approves the overall organizational structure, and has the ultimate
responsibility for ensuring that adequate governance and internal controls system are established and
maintained, being supported in this function by the Audit Committee.
The Audit Committee plays a central role in the development of a governance culture and an internal control
system with a direct relation with the Board of Directors, the Bank’s internal control units and the external
auditors.
The current management of the Bank is delegated in the Executive Committee. This Committee established
different specialized commissions, with the participation of two or more Executive Directors, and first line
Managers who directly report to them.
The organizational structure of the Group is based on the principle of the segregation of functions between
the business units and internal control functions, aiming that any situations of potential conflict of interests
are identified in advance, minimized and subject to careful and independent monitoring.
The internal control system includes a set of principles, strategies, policies, systems, processes, rules, and
procedures established in the Group aimed at ensuring:
•Efficient and profitable performance of the activity, in the medium and long-term, ensuring the effective
use of the assets and resources, the business continuity and survival of the Group, namely through an
adequate management and control of the activity risks, through a prudent and correct assessment of
assets and liabilities, as well as through the implementation of mechanisms for prevention and protection
against errors and fraud.
•The existence of financial and managerial information, which is complete, pertinent, reliable, and
timely, to support decision-making and control processes, both at an internal and external level.
•Observance of the applicable legal and regulatory provisions issued by the Supervision Authorities,
including those relative to the prevention of money laundering and financing of terrorism, as well as
professional and ethical codes of conduct, standards and practices, internal and statutory rules,
guidelines of the Basel Banking Supervisory Committee and European Banking Authority (EBA), so as to
preserve the image and reputation of the institution before its Customers, Shareholders, Employees and
Supervisors.
•An effective Risk Management Function (RMF) with well-defined processes to identify, manage, monitor,
and report the risks that the Group is exposed.
•A Compliance Function ensuring the alignment with legal, regulatory, and statutory requirements, and
with internal rules, including rules of conduct and relationship with Clients, Investors, Supervisors’
Entities, and others, which rules are established in a Code of Conduct.
•An Internal Audit Function ensuring the effectiveness and consistency of the internal control processes
and mechanisms.
•The alignment of subsidiaries operating model with the organizational and managerial principles defined
by the Bank, as the consolidating Entity.
•The adoption of sound sustainability principles, namely regarding Environmental, Social and Governance
(ESG) factors, and its coherence with the Group’s activity.
•The good image and reputation of the Bank towards its stakeholders.

| 2022 REPORT & ACCOUNTS

120 |
To achieve these objectives, the internal control system is based on the compliance function, the risk
management function and internal audit function. The Heads of these three divisions are appointed by the
Bank's Board of Directors, by proposal of the Committee for Nominations and Remunerations, after an opinion
from the Audit Committee and of the Committee for Risk Assessment.
The internal control system is based on:
•A control environment supported by high integrity and honesty standards, promoting a strict compliance
with the laws and regulations, by the effective enforcement of a ‘check and balance’ system, including
adequate segregation of duties, with the objective of preventing conflicts of interest, and by process
based operational management models and control activities, that allow for clear identification of the
implemented controls and the assessment of their efficiency.
•A solid risk management system, aimed at the identification, evaluation, follow-up, and control of all
risks which might influence the Group's activities.
•An efficient information and communication system, designed to guarantee the collection, processing and
transmission of relevant, encompassing, and consistent data, within a timeframe and manner that allows
for an effective and timely management and control of the institution's activity and risks.
•An effective monitoring and correction process, implemented with a view to ensuring the adequacy and
effectiveness of the actual internal control system over time, to immediately identify any flaws (defined
as the group of existing, potential, or real defects, or opportunities for the introduction of improvements
that will strengthen the internal control system), and ensuring the triggering of corrective action.
•Strict compliance with all the legal and regulatory provisions by the Group's Employees in general, and by
the people who hold senior or managerial positions, including members of the management bodies.
•A governance model that defines that the business areas are responsible for risk taking, ensuring the
effective monitoring, control and management of the risks assumed, and supporting the independent
review of the risk levels incurred as compliant with the Risk Appetite Framework.
The internal control system is consistently applied across all Group entities, supported on group codes issued
by BCP defining global policies, principles, and rules, considering, and complying with local, legal or
regulatory requirements of the countries where operations are based.
Three lines of defence model
The Bank’s internal control system is based on the “Three Lines of Defence Model”, aiming to ensure:
•A clear accountability of the business areas for the respective assumption of risks.
•The effective monitoring, control and management of the risks assumed.
•An independent evaluation, to be reported to the Board of Directors and to the Executive Committee, of
the levels of risk assumed, their compliance with the Risk Appetite Framework and the effectiveness of
the established internal control systems.
The business lines, as the first line of defence, take risks and are responsible for their operational
management directly and on a permanent basis. For that purpose, business lines have appropriate processes
and controls in place that aim to ensure that risks are identified, analysed, measured, monitored, managed,
reported and kept within the limits of the institution’s risk appetite and that the business activities comply
with the external and internal requirements.
The risk management function and the compliance function form the second line of defence.
The risk management function facilitates the implementation of a sound risk management framework
throughout the institution and has responsibility for further identifying, monitoring, analyzing, measuring,
managing, and reporting on risks and forming a holistic view on all risks on an individual and consolidated
basis. It challenges and assists in the implementation of risk management measures by the business lines to
ensure that the process and controls in place at the first line of defence are properly designed and are
effective.
The compliance function monitors the Bank’s compliance with legal, regulatory, and internal policies
requirements, including the reputational protection of the Bank, comprising, among others, the prevention
of financial crime activities. It provides advice on compliance matters to the management body and
establishes policies and processes to manage compliance risks and to ensure an overall compliance culture
within the Bank.

2022 REPORT & ACCOUNTS |

|121
Both the risk management function and the compliance function intervene to ensure the improvement and
strengthening of internal control and risk management systems interacting with the first line of defence
whenever necessary.
The internal audit function, as the third line of defence, conducts risk-based audits and reviews the internal
governance arrangements, processes, and mechanisms to ascertain that they are sound and effective,
implemented and consistently applied, to assess the suitability and efficiency of the organizational culture,
of the risk management process, of the internal control system and of the governance models in place. The
internal audit function performs its tasks fully independently of the other lines of defence.
Internal Control subsystems
The internal control system includes the following subsystems: the risk management system, the information
and reporting system and the internal control monitoring system.
Risk management system
The risk management system corresponds to the set of integrated and permanent processes which enable the
identification, assessment, monitoring and control of all risks, to which the Group's institutions are exposed,
in order to keep them at levels that are predefined by the management and Supervisory Bodies, and takes
into consideration the BCP risk taxonomy which includes the risks identified by the Regulatory and
Supervisory Authorities, as well as all other risks which, in view of the specific situation of the Group's
institutions, could become materially relevant. The Risk Office is responsible for keeping the BCP risks
taxonomy updated as well as for promoting and conducting the regular risk identification process in the
Group.
The risk management system takes into consideration the credit risk, market risk, interest rate risk, foreign
exchange rate risk, liquidity risk, compliance risk, operational risk, information technology risk, strategy risk
and reputation risk, as well as all other risks that, in view of the institution’s specific situation, may prove
material for its feasibility and sustainability. Environmental and social aspects are included in the assessment
of these risks, once they are considered risk drivers that are transversal to all risk types.
The risk management system ensures the segregation between the risk management function and the risk-
generating business activities, respectively the second and first lines of defence. The internal audit, as third
line of defence, ensures independent analysis concerning the risk activity of the first and second lines. The
credit analysis and granting process ensure the segregation and independence between the credit analysis
and rating structures and the business origination units.
The risk management system ensures timely reaction to changing circumstances and conditions that
engenders new risks and change the risk profile of the Bank.
Management information and reporting system
The management information and reporting system ensures the existence of information, which is
substantive, up-to-date, understandable, consistent, timely and reliable, to enable an overall and
encompassing view of the financial situation, the development of the business, the achievement of the
defined strategy and objectives, the risk profile of the Group and the behaviour and prospective evolution of
relevant markets and risks.
The output of the system is an information flow enabling the management with a global and comprehensive
view on the Group’s financial standing, non-financial information and risk data on the compliance with the
obligations assumed before third parties, legal and regulatory, and the regular monitoring of the activity, the
implementation of the defined strategy and objectives so as to support decision-making processes, and also
on the Group’s overall risk profile, in aggregate terms and detailed by risk; and the performance, evolution
and risk profile of the market(s) in which the Group operates.
For this purpose, each entity of the Group develops, implements, and maintains formal processes for
obtaining and processing information that is appropriate to the respective size, nature and complexity of the
activity carried out, developing communication processes and reporting lines that ensure an adequate and
swift transmission of relevant information to the due intervenient, both internal and external. An adequate
organizational structure promotes the necessary data flow between the relevant parties in a process and
ensures the necessary confidentiality in information flows.
The financial information process is supported by the accounting and management support systems which
record, classify, associate and archive, in a timely, systematic, reliable, complete, and consistent manner,

| 2022 REPORT & ACCOUNTS

122 |
all the operations carried out by the Bank and its subsidiaries, in accordance with the rulings and policies
issued by the Board of Directors and the Executive Committee.
Clear duties and responsibilities are set for each organizational unit in the information and communication
processes and in the decision-making process.
Planning process
The Group planning process defines a long run sustainable strategy, compatible with the corporate vision and
previously established goals, with its market positioning, approved risk profile and with the implemented
internal control system.
The planning process is based on properly grounded assumptions, subject to sensitivity analysis and on
reliable and understandable information. As a result, clear, precise, and sustainable objectives are defined
for the global activity and for each business area, including the products, activities, systems and processes of
the Group and the human and material resources, namely the adequate levels of capital and liquidity,
necessary to fulfill the defined strategy are identified.
The planning process complies with the Risk Policy of the Group, as per the Risk Appetite Framework,
ensuring that the profitability levels are aligned with the risks involved.
The Group’s planning process includes the preparation of the annual and three-year budget, the verification
of the sufficiency of capital and liquidity (ICAAP e ILAAP), the execution of stress tests within the internal or
supervision scope, the preparation of the Funding and Capital Plan and of the Recovery Plan, the activities
deriving from the resolution planning and remaining initiatives that, at each moment, are required to be
implemented to comply with the requirements issued by the Supervision Authorities.
The Chief Financial Officer and Chief Risk Officer of the BCP, are responsible for the different elements of
the Group’s planning process, together with the Chief Financial Officers of the main subsidiaries.
The Group’s strategy is communicated, by the adequate means and detail, to all the Employees of the Bank.
Monitoring process
The monitoring and correcting system includes all the control and assessment actions to ensure the
permanent effectiveness and adequacy of the internal control system, namely, through the identification of
deficiencies in the system - in terms of its design, implementation and/or use.
This process is continuously executed and complemented by independent, periodical and or extraordinary
evaluations made by the Internal Audit.
The frequency of the control and assessment actions depend on the nature and magnitude of the risks
inherent to the activity carried out and the effectiveness of the associated specific controls.
All internal control of deficiencies and events of non-compliance are duly recorded in a deficiencies data
base at Group level, documented, and reported to the appropriate management levels to enable the
adoption of correction measures in line with the respective remediation plan. Processes for the follow-up
and validation of the measures implemented are established with clear deadlines according to the inherent
risk level.
Internal control system governance
The internal control system is supported by a governance model that defines the responsibilities for the
assumption of risks by the Business Areas, and ensures an effective follow-up, control and management of
the risks assumed, and an independent evaluation of the risk levels assumed as per the Risk Appetite
Framework.
The key pillars of the governance model implemented in the Bank are:
•Clear, transparent, and understandable rules are set and communicated to all employees to enable
supporting the development of the activity while ensuring an adequate broad and effective internal
control system.
•Coherent, clear, and objective definition of the competences and responsibilities of each structure unit
and/or function, reporting lines and authority levels, information flows, are communicate across the
organization, including an appropriate segregation of potentially conflicting functions or duties, also
ensure that any potential conflict of interests is identified in advance, minimized and subject to an
independent and careful monitoring.

2022 REPORT & ACCOUNTS |

|123
•Sufficient and appropriate material and human resources are provided at all levels of the organization for
the execution of the responsibilities, activities, and tasks inherent to the internal control system.
•Physical and functional segregation of the business activities and the respective operational and control
services, avoiding possible conflict of interests through ensure robust control activities, including regular
reviews, physical controls, authorization, verification, and reconciliation.
The Risk Office's activity is essentially focused on ensuring the effective application of the Group's risk
management system, namely, by developing, proposing, implementing, and controlling the use of a set of
assessment methodologies and metrics, that allow for a correct assessment of the risks incurred and arising
from the Group's activities, which are documented by internal rules and regulations. It is also responsible for
promoting and coordinating the policies and rules applicable to risk management and control at all entities of
the Group, with the responsibility of ensuring the global monitoring of risk and the alignment of concepts,
practices, and objectives on a consolidated basis. Under this framework, the Risk Office has access to all the
sources of information of the Group entities that are necessary for the exercise of the identification,
measurement, limitation, monitoring, mitigation and reporting of the various types of risk at consolidated
level.
The activity of the Compliance Office is transversal to all Institutions of the Group, in terms of applicable
compliance policies, with observance of the legal specificities of each jurisdiction. The Compliance Office
has access to the preventive information systems on money laundering and terrorism financing adopted by
the different entities of the Group, being equally informed and giving an opinion on all changes to the IT
alert systems and the processes for identifying Customers and communication of irregular cases verified in
the Group's entities, within the scope of the control of money laundering and terrorism financing, in order to
promote an alignment of systems, methodologies and criteria with those used by BCP.
The Accounting Division and the Studies, Planning and ALM Division receive and centralize the financial
information of all subsidiaries.
The corporate areas of the Bank, namely the Research, Planning and ALM Division, Accounting and
Consolidation Division, the Treasury, Markets and International Division, the Compliance Office, the Risk
Office, and the Audit Division ensure the existence of the procedures necessary to obtain all relevant
information for the consolidation, accounting and financial information and remaining elements supporting
the management, as well as the supervision and control of the risks at Group’s level. These procedures
include:
•The definition of the contents, the terms, and the format of the information to be reported by the
companies included in the consolidation perimeter of the parent-company, in accordance with the
accounting policies and guidelines defined by the management body, as well as the dates when the
reporting is required.
•The identification and control of the intra-Group operations.
•Assurance that the relevant accounting and financial information is consistent between the different
subsidiaries, so that it is possible to measure and monitor the evolution and profitability shown by each
business, verify the compliance with the objectives that have been established, as well as evaluate and
control the risks incurred by each entity, both in absolute and relative terms.
•Timely communication of extraordinary events which are relevant in terms of risk for the subsidiary or for
the Group.
•A financial information and reporting system that is supported by adequate contingency arrangements.
•Validating and monitoring the implementation of the corrective measures to resolve internal control
deficiencies that have a material potential impact.
The Audit Department is responsible for an on-site control function of the internal system, exercising this
function transversally on a permanent and independent basis, assessing, always and pursuant to the
established plan, the adequacy and effectiveness of the different components of the internal control system,
issuing recommendations based on the outcome of those assessments. The Audit Division is informed of the
conclusions of the inspection and internal audit actions carried out in each entity of the Group, especially
from those that assess the effectiveness and integrity of the entity's internal control system.
Common principles across the Group
To foster Group coherence, and keeping up with local laws and regulations, internal control system’s
organizational models similar to that of the Bank are established in the Group’s subsidiaries abroad and in
the entities in Portugal in which the Group participates and which are part of the Group, by anticipating the
existence of an Audit Committee and a Risk Assessment Committee, or equivalent bodies. The local
Supervisory Bodies have, in what the internal control system of each entity is concerned, the mission to

| 2022 REPORT & ACCOUNTS

124 |
verify its quality, integrity and effectiveness, as well as to evaluate its coherence and adherence with the
internal control system of BCP and the Group.
The Bank’s governance model and internal control system is extended to all subsidiaries, in a way which is
compatible with their nature, complexity and business model, ensuring the maximum possible level of
coherence and alignment:
•The CRO of BCP is responsible for coordinating the risk management system at Group’s level through the
Risk Officers and the Compliance Officers of each subsidiary.
•The CFO of BCP is responsible for coordinating the financial and accounting information system as well as
for the planning process at Group’s level.
•There is always at least an Executive Board member of BCP representing the parent company in each
subsidiary’s Board of Directors, being responsible for monitoring the overall performance of the entity.
•Notwithstanding, to ensure the maximum consistency of the criteria, methods, processes, and models
used in all subsidiaries, the CRO of BCP is appointed as a non-executive director of the subsidiary’s
management body, with supervision functions, being also designated for the subsidiaries’ Audit
Committee and Risk Assessment Committee when these governance bodies exist.
The Bank, as the Group's parent company, ensure that all subsidiaries implement internal control systems
that are coherent with each other, proportionate to the risks undertaken and with the local regulations and
legislation in force.
Whistleblowing
The Group has in place and maintains a Whistleblowing Policy and procedures, which are available for staff
or any person regardless of their relationship with any entity of the Group to report potential or actual
breaches of regulatory or internal requirements, through specific, independent, and autonomous channels.
The Whistleblowing Policy covers eventual or potential irregularities, the acts and omissions, both with
malicious intent or negligence, related with management, accounting organization, internal supervision or
serious evidence of breaches of duties that, in a serious manner, are susceptible namely of infringe the law,
articles of association, the regulations and other rules in effect, endanger, directly or indirectly, the assets
of the Customers, of the Bank and of the Shareholders or cause reputational damage to Bank.
The Whistleblowing procedures ensure, among others the protection of the identity and personal data of
both the person who reports the breach and the natural person who is allegedly responsible for the breach,
through which the Entity shall adopt the highest form of anonymity legally available and that the person
reporting the breach is appropriately protected from any negative impact (e.g. retaliation, discrimination or
other types of unfair treatment). Any information about irregularities provided through the whistleblowing
procedures is analyzed by the Audit Committee, supported by the Compliance Office and the Audit Division,
ensuring that the potential or actual breaches raised are assessed and escalated, including as appropriate to
the relevant competent authorities.

2022 REPORT & ACCOUNTS |

|125
Main Risks and Uncertainties

Risk | Sources of Risk | Level of Risk | Trend | Interactions/Mitigations
Regulatory and legal | •General increase in regulatory complexity •Adaptation to the regulatory framework associated to ESG objectives •Requirements in calendar provisioning requirements and level of conservatism of models, derived from EBA guidelines •Requirements in provisioning requirements to address the impacts of the current geopolitical context and its repercussions •Risks of approval of extraordinary fiscal measures or of a similar nature, with impact on costs •Increasing regulatory requirements of AML nature and greater complexity of restrictive measures stemming from the War in Ukraine •Pressure on capital ratios, including those that may arise from regulation under climate and environmental risk factors •Possible impacts of Central Bank Digital Currency (CBDC) on the commercial banking model, if not correctly implemented. | Medium |  | ▪Culture of compliance and anticipation of capital requirements ▪Rigorous and efficient management of capital and its implications on the business model ▪Execution of the Bank Millennium Recovery Plan (PL) ▪Assessment and classification of climate and environmental risks associated with credit portfolios. ▪Promotion of strategics and commercial solutions that promote the transition to low carbon production models. ▪Development of more sophisticated AML models and adoption of practices in compliance with regulatory requirements, ensuring adequate prevention and compliance with restrictive measures
Sovereign | ▪High public deficit and high weight of debt in GDP in Portugal ▪Lower Lower capacity to implement budget and fiscal stimulus. ▪ Impact of rising interest rates on the cost of sovereign debt ▪ Possible budgetary impacts of measures to support the economy to address the challenges of the current context ▪ Exposure to Portuguese and other Eurozone, Polish and Mozambican sovereign debt ▪ Widening credit spreads in peripheral countries ▪Volatility in capital markets | High |  | ▪Uncertainty about timing of ECB monetary policy normalization ▪ Positive fiscal impact via tax revenue and favorable trend in the stock of public debt ▪ Increase in funding costs and implementation of contingency measures at European and national level ▪Greater diversification of the sovereign debt portfolio ▪Adoption of hedging measures of portfolio interest rate risk ▪Reduction of the size of the portfolio classified to FVOCI

| 2022 REPORT & ACCOUNTS

126 |

Risk | Sources of Risk | Level of Risk | Trend | Interactions/Mitigations
Operational | ▪Rising cyber threats seeking to exploit the growing weight of remote work and digital channels ▪Growing number of digital Customers and increase in internet and mobile transactions, requiring the maintenance of a high level of availability of the ICT systems (Information and Communication Technologies) ▪Increase in information needs, implying a greater rigor in the management and control of data quality ▪Implications of the acceleration of automation, integration and digitalization of processes, on the operational resilience of the banking sector | Medium |  | ▪Continuous monitoring of the alignment of technological development plan with the business strategy ▪Enhancing of skills awareness and resilience against cyber risks ▪Promotion of a strong internal control culture ▪Implementation of a comprehensive technology renewal program ▪Reinforcement of data protection accountability framework ▪Development of continuous improvement of Data Quality processes according to the principles of BCBS239
Credit | ▪No prospects of a short-term resolution of the geopolitical conflict in Eastern Europe ▪Potential deterioration of the economic and financial situation of companies, notably debt ratios. Particularly affected will be companies in sectors that are more vulnerable to the impacts of Russia – Ukraine war, the disruption of supply chains, the increase in costs, namely energy and the increase in financing costs. ▪ Possibility of stagflation in Europe ▪ Decrease in individual´s disposable income, because of inflation and rising interest rates, with an impact on the capacity to resort to additional indebtedness ▪ Delay in implementing the Recovery and Resilience Plan (PRR) ▪ Limitations on access to available and qualified labor; ▪ Credit risk spreads impacted by strong competitive environment due to over- liquidity in the market ▪ Impact of ESG risk drivers on the loan portfolio ▪ Impact of government measures aimed at mitigating the effects of the increase in indexes on mortgage credit (DL 80-A/2022) | High |  | ▪Positive and recurrent track record in the execution of the NPA reduction plan ▪ Significant reduction in the NPE ratio standing at 3.5% in Portugal ▪ Adequate level of coverage of the NPE's portfolio by impairments and collateral ▪ Behaviour of the economy at a national and European level more favourable than anticipated ▪ Additional support to the economy through the Recovery and Resilience Plan (PRR) and measures to minimize the impacts of interest rate increase on households. ▪ High level of collateralization of corporate credit exposures (notably with state or multilateral guarantees) ▪ Improved loan origination and monitoring framework ▪ Incorporation of ESG risk drivers in credit policies ▪ Relatively low volume of exposures to sectors exposed to high transition risks ▪Establishment of impairment overlays to address the uncertainties of macroeconomic scenarios ▪Proactivity in the monitoring of customers with mortgage loans
Market | ▪Volatility in capital markets ▪Increase in market interest rates ▪Uncertainty regarding the near-term monetary policy trajectories, namely in the Eurozone ▪Uncertainty on economic growth and inflation, as well as the implications of lasting geo-political tensions | Low |  | ▪Limited exposure to trading portfolios ▪Balance sheet hedging of interest rate risk

2022 REPORT & ACCOUNTS |

|127

Risk | Sources of Risk | Level of Risk | Trend | Interactions/Mitigations
Liquidity and Funding | ▪Increased volatility in financial markets cause widening of spreads, reduction of eligible collateral after haircuts, margin calls from derivatives and reduced liquidity in WSF debt market ▪Increase in the cost of customer funds in a context of rising interest rates and more aggressive competition from banks and non banks ▪Need to comply with MREL requirements and difficulty in market access, notably in Poland ▪Restrictive Monetary Policy, with systemic impacts ▪Change in customer deposits’ structure | Low |  | ▪ On-balance sheet Customer funds, mainly retail, decisive in the funding structure ▪ Increase in the cost of funds with no expected material impact on liquidity ▪ High coverage of discountable assets with the ECB ▪ Daily monitoring of deposit inflows and outflows
Litigation associated with the CHF loan portfolio in Poland | ▪Increasing in the number of open court cases ▪Growing share of cases with court decisions against the Polish banks ▪Risks related to verdicts issued by Polish courts in lawsuits against Bank Millennium ▪Complexity and uncertainty regarding the outcome of judicial proceedings, as well as the possible implementation of the solution of the President of Polish Supervision, or other negotiating solutions, or possible decisions of the Supreme Court or the European Court of Justice, in particular on the decision of this Court on the acceptance of the opinion issued by its General Advocate on 16 February 2023 regarding the compensation between the parties. | High |  | ▪Decrease of the overall CHF loan portfolio ▪Increase of coverage by provisions of the CHF loan portfolio ▪Increase of out of court settlements with debtors with mortgage loans in CHF
Pension Fund | ▪Effect of wage developments on responsibilities ▪Effect of asset value on portfolios | Medium |  | ▪Integrated management of assets and liabilities in order to obtain an adequate balance between risk and return ▪Comfortable coverage ratio of the fund’s liabilities by the assets

| 2022 REPORT & ACCOUNTS

128 |

Risk | Sources of Risk | Level of Risk | Trend | Interactions/Mitigations
Real estate and other investments | ▪Uncertainty regarding the development of real estate activity ▪Uncertainty related with market and regulatory trends in terms of environmental awareness ▪Risks related to the Bank's collaterals and properties ▪Impact of legislative measures for housing support | Medium |  | ▪Positive track record in reducing the portfolio of foreclosed assets ▪Expected low level of new entries of foreclosed assets ▪Impact of insurance policies in the mitigation of real estate assets ▪Reduction of exposure to Restructuring Funds according to divestment plans ▪Relatively low value of the portfolio of real estate and other assets.
Recurring profitability/ Business Model | ▪Regulatory limitations on fees and commissions ▪Impact of economic deterioration on asset value and recurrent cost of risk ▪Wholesale funding cost ▪Inflationary pressures on operating costs ▪New global players and competition from Big Techs ▪Pressure to increase rates of return on deposits | Low |  | ▪Strict management of net interest income ▪Strict cost structure control ▪Control of the objectives defined in the strategic plan

2022 REPORT & ACCOUNTS |

|129
Risk management

Framework
Risk appetite
The BCP Group carries out its business activities in a controlled, prudent and sustainable manner, always
based on the adequacy and compatibility between the objectives set for the business and the levels of
risk tolerance defined in terms of sustainability and profitability, in the long-term.
Thus, the Group establishes and implements controls and limits on the material risks to which its
activities may be subject, based on its “Risk Appetite Statement” (RAS) which concurs, in a relevant way,
for a standing of prudence and sustainability of the business, in view of its profitability, as well as of the
satisfaction of the different stakeholders: Shareholders, Customers and Employees.
The Group RAS is composed by a broad set of indicators that are considered of primary importance and
representative of risks assessed as "material", within the formal risks’ identification and quantification
process, that is regularly updated. The RAS metrics are grouped in five blocs covering solvency, funding,
profitability, reputation and franchise and also sustainability risks.
For each of the indicators concerned, two levels of limitation are established: an 'alert level', up to which
the level of risk represented is still acceptable but from which corrective measures must be taken
immediately (in order to that the level of risk regained to an comfortable level) and a 'level of breach’,
which requires immediate measures with significant impact, aimed at correcting a risk situation
considered excessive.
Stemming from the RAS indicators, other lower-level indicators (and respective limits) are established,
with a higher level of granularity, ensuring a more detailed monitoring, appropriate for a day-to-day
approach to the risks’ control of business processes, based on specialized metrics and with a marked
technical nature. All risk limits are approved by the competent Governance bodies defined in the internal
regulations and are periodically reviewed and updated.
For the main geographies in which the Group operates, specific risk appetite indicators (“individual” RAS)
are also established. Thus, the definition of RAS involves indicators for Portugal, Poland and Mozambique,
some of which are part of the Corporate RAS, which is a set of obligatory metrics for all geographies (but
with appropriate limits for each of the operations and structure in question), disaggregating the Group’s
risk appetite into the local geographies risk appetite. Besides the Corporate RAS metrics, local RAS
include other metrics aiming to measure idiosyncratic risks in each geography.
Risk strategy
The above definition of RAS - as primary set of indicators that render and materialize the risk appetite -
is one of the guiding vectors of the Group's "Risk Strategy", which is approved by the Board of Directors,
by proposal of the Committee for Risk Assessment. Based on the RAS, several lines of action are
established, to be developed by different organizational units of the Group, to address the mitigation or
control of the risks classified as material within the risks’ identification and assessment process. These
lines of action formally constitute the Group's Risk Strategy. Hence, the RAS and the Risk Strategy are
inseparable and central elements of the Group's risk management, both aiming to control and mitigate
risks classified within the risks’ identification process.
Integration between the business and risk management
The risk appetite structure - which includes the identification of material risks, the RAS and the Risk
Strategy and is reviewed at least once a year or whenever the risks´ monitoring so advises (e.g.
conclusion that there are new material risks) - provides a reference framework for the permanent
monitoring of risks affecting the business and business support activities developed, for the monitoring of
the variables, indicators and limits that are derived from RAS. Therefore, the permanent follow-up based
on this structure is the result of a strong link between the risk management framework thus defined the

| 2022 REPORT & ACCOUNTS

130 |
methods and indicators applicable to the activities carried out, this link being essential for the
performance of the Group's risk management.
In addition, there is an interaction between the definition of the Group's risk appetite structure and its
business objectives, represented in the business planning and budgeting. Thus, the risk appetite structure
conditions the definition of the business objectives, since the business plan as to respect the risk limits
established by the Board of Directors.
In its turn, the business objectives and risk appetite structures are the foundations for all activities and
lines of business carried out, also setting out the global controls on the Group's strength, such as the
stress tests and the internal processes to assess capital (ICAAP) and liquidity adequacy (ILAAP) as well as
the recovery plan and the activities in the scope of the resolution planning.
The following figure summarizes the relationships described above, providing a graphic representation of
the integration of risk management within the scope of the business developed by the BCP Group.
1 Internal Capital Adequacy Assessment Process
2 Internal Liquidity Adequacy Assessment Process
3 Recovery and Resolution Planning

2022 REPORT & ACCOUNTS |

|131
Risk management Governance
The composition, capacities and responsibilities of the management and control bodies that intervene in the
risk management governance are the following:
Board of Directors
The ultimate body of the BCP Group's risk management structure is the Board of Directors, which, within
the scope of the functions assigned to it by the Bank's Articles of Association, has the leading role in the
risk management and control structure. The Board of Directors is responsible for defining the Group's
global strategic guidelines and objectives, the profile and risk appetite, promoting the risk culture and
risk strategy, reserving for itself the approval of group codes that establish policies, principles, rules and
risk limits. The Board of Directors monitors the evolution of metrics and risk indicators translated into the
RAS (including the approval of remediation measures in case of breaches to the limits) approves the
conclusions of the ICAAP and ILAAP processes and the performance of the Internal Control System.
Risk Assessment Committee
The Risk Assessment Committee, appointed by the BoD, is composed by three to five non-executive
Directors and has, among others, the following capacities:
•Evaluate the integrity and adequacy of the Risk Management function.
•Advising the BoD on risk appetite and risk strategy, accompanying and intervening in the definition
and review of the Group's Risk Appetite Framework and providing an opinion on its adequacy to the
BoD.
•Monitoring the evolution of the RAS metrics, verifying their alignment with the defined thresholds and
levels and monitoring the action plans designed to ensure compliance with the established risk limits.
•Advising the BoD on the policies regarding the risks’ identification, management and control within
the Group, monitoring the global risk levels in order to ensure that those are compatible with the
goals, the available financial resources and the approved strategies for the development of the
Group’s activities.
•Oversee the implementation of the strategies for capital and liquidity management as well as for all
other relevant risks to the Group, such as market, credit, operational (including legal, IT and
compliance), and reputational risks, in order to assess their adequacy against the approved risk
appetite and strategy.
•Monitoring the capital and liquidity planning processes (ICAAP and ILAAP), providing an opinion to the
BoD concerning the respective conclusions, as well as analyzing and approving the conclusions of the
regular follow-up on these processes.
•Monitoring and intervening in the Recovery Plan review, providing an opinion to the BoD on the
respective adequacy.
Within the resolution planning, the Committee for Risk Assessment approves its annual work plan and
monitors its execution.
The Risk Officer functionally reports to this Committee and participates in its meetings, presenting the
evolution of the key risk metrics and indicators, as well as all incidences, changes and evolutions relative
to the Risk Management System (RMS).
Audit Committee
The BoD’s Audit Committee is elected by the Shareholders’ General Meeting and is composed by three to
five non-executive Directors, mainly independent. Within the competences of this Committee, this
Committee has global corporate supervising capabilities - e.g. in what concerns financial information,
namely risk levels follow-up - as well as those that are attributed within the Internal Control System,
namely:
•Overseeing the management activity of the Bank;

| 2022 REPORT & ACCOUNTS

132 |
•Monitoring the suitability and effectiveness of the Bank's organizational culture, governance models
and internal control and risk management systems, including the prevention of money laundering and
terrorist financing;
•Monitoring the accounting policies and processes adopted by the Bank, the financial reporting process
and submit recommendations aimed at ensuring its integrity;
•Overseeing the performance of the Compliance and Internal Audit functions;
•Supervising and controlling the effectiveness of the risk management system, in conjunction with the
Committee for Risk Assessment ; as well as the internal control system in its different aspects and also
the internal audit system itself;
•Issuing an opinion in relation to operations of acquisition of goods and services and involving related
parties, aiming to avoid conflicts of interests;
•Analyzing the information is received through the whistleblowing mechanism as well as the clients
claims.
•Monitor the activity of the External Auditor and periodically assess its independence and objectivity in
the exercise of its activity.
The Audit Committee holds regular meetings with the Heads of the Audit Division, the Risk Office and the
Compliance Office.
The Compliance Officer participates in the meetings of this Committee, presenting the evolution of the
monitoring of compliance and compliance risks, as well as all developments and interactions with
regulation/supervision in terms of regulatory compliance.
The Risk Officer participates in this Committee’s regular meetings, reporting on the evolution of the main
indicators and metrics concerning risks and credit impairment, as well as on the implementation status of
the recommendations that concern the risk management system, issued within the scope of internal
control or by the supervisory/regulatory authorities.
The Head of Audit Division reports regularly to the Audit Committee on interactions and the status of the
recommendations of the prudential supervision entities, as well as on the audits carried out on the Bank's
processes.
Committee for Corporate Governance, Ethics and Sustainability
This Committee, appointed by the Board of Directors, is composed of a minimum of three and a maximum
of five non-executive directors.
Amongst other that may be delegated by the Board of Directors, the competences of the Committee for
Corporate Governance, Ethics and Sustainability include:
•Recommend the adoption by the Board of Directors of policies, that observe the ethical and
professional conduct principles and best corporate governance practices and social responsibility.
•Support the Board of Directors and its Committees in the evaluation of the systems that identify and
solve conflicts of interest.
•Assess the compliance function, analyzing the procedures in place and the identified non-
compliances.
•Issue opinions addressed to the Board of Directors on the Code of Conduct and on other documents
defining business ethical principles.
•Every time it deems necessary, submit to the Board of Directors a report on the evaluation and
monitoring of the structure, ethical and professional conduct principles and corporate governance
practices of the Bank and on the company's compliance with the legal, regulatory and supervisory
requirements on these issues.
•Issue an opinion for the Board of Directors on the Annual Corporate Governance Report.
•Issue an opinion on the Annual Sustainability Report, concerning issues for which it is responsible.
•Time it deems necessary, submit to the Board of Directors a proposal on the guidelines for the
Company's policies, based on a culture identified with the ethical and professional conduct principles
targeted at contributing for the pursuit of social responsibility and sustainability goals. Proposing,
particularly, guidelines for the social responsibility and sustainability policies of the Company,

2022 REPORT & ACCOUNTS |

|133
including, among other, the values and principles for safeguarding the interests of the shareholders,
investors and of those interested in the institution and also principles of social charity and
environmental protection.
•Issue an opinion on the Group Codes and respective annexes whenever this competence has been
delegated to it by the BoD.
Committee for Nominations and Remunerations
This Committee, appointed by the Board of Directors, is composed of a minimum of three and a maximum
of five non-executive Directors.
The BoD delegates in the Committee for Nominations and Remunerations the monitoring on issues related
with human resources, assessment and composition of the Board of Directors and of its Committees,
reviewing the Remuneration Policies of the Directors and Employees, including the Key Function Holders
(KFH), and monitoring their respective implementation, in accordance with the powers conferred to it by
the law and its own Regulations.
Other functions of this Committee:
•Monitor the existence of specific policies related with selection and recruitment, evaluation of
performance, promotion and career management, training, and development of competences.
•Elaborate and report to the BoD recommendations on the candidates to members of the Governance
and Supervisory bodies of the Bank, ensuring the Fit & Proper assessment process.
•Issue an opinion to the BoD on the Selection, Assessment and Succession policies for members of the
Governance and Supervisory bodies and responsible for control functions.
•Prepare and maintain a succession plan for members of the Board of Directors and KFH.
Executive Committee
The Executive Committee is responsible for the daily management of the Bank aiming to pursue the
corporate objectives within the risk limits approved and defined by the Board of Directors. Particularly
regarding the risk management function, the Executive Committee is responsible for:
•Implement the Bank's general business strategy and main policies, considering the Bank's long-term
financial interests and solvency.
•Implement the global risk strategy approved by the BoD and ensure that management devotes
sufficient time to risk issues.
•Ensuring an adequate and effective internal governance model and an internal control framework,
including a clear organizational structure and independent internal risk management functions.
•Promote the risk culture across the BCP Group, addressing risk awareness and appropriate risk-taking
behaviour.
•Promote a corporate culture and values that foster the ethical and responsible behaviour of
employees.
•Promote the development, implementation and maintenance of formal processes for obtaining,
producing and processing substantive information, appropriate to the size, nature, scope and
complexity of the activities carried out, as well as to the institution's risk appetite, which ensure its
reliability, integrity, consistency, integrity, validity, timeliness, accessibility and granularity.
The Executive Committee is supported, to carry out its responsibilities, by several management
commissions in a wide range of dimensions: Business Activity; Credit Decisions; Risk and Compliance
Management; Planning, Costs and Investments; Capital Structure and Liquidity Management; Human
Resources Management; Operational Resilience. These management commissions can benefit from the
presence of one or more internal control function units (Risk Office, Compliance Office and Internal
Audit) which ensures timely detection of any potential internal control deficiencies.
The Executive Committee delegates in the Risk Commission, the Compliance and Operations Risk
Commission (CORC) and the Operational Resilience Commission, the mission of monitoring the risks the
Group is exposed to as well as the deficiencies identified regarding the internal control system. These
commissions are also responsible for monitoring the adoption of corrective measures and the overall

| 2022 REPORT & ACCOUNTS

134 |
progress of open recommendations. Furthermore, the CORC may also evaluate and propose improvements
to be introduced to the internal control system.
Risk Commission
This Commission is appointed by the EC and has the responsibility for defining, at an executive level, the
framework and the risk management policies and instruments within the Group, establishing the
respective principles, rules, limits and practices for the Group Entities, considering the defined risk
thresholds by the Board of Directors.
The Risk Commission monitors the overall levels of credit, market, liquidity and operational risk, as well
as all other risks considered materially relevant for the Group, ensuring that the risk levels are
compatible with the goals, available financial resources and strategies that have been approved for the
development of the Group's activity. This Commission also validates the compliance of risk management
with all the applicable laws and regulations.
The Chief Executive Officer (CEO), the Chief Financial Officer (CFO) and the Chief Risk Officer (CRO),
and, optionally, any other Executive Director.
Other members of the Commission are the Risk Officer, the Compliance Officer and the Heads of the
following Divisions: Treasury, Markets and International (DTMI), Credit (DCR), Rating (DRAT), Economic
Studies, Sustainability and Cryptoassets (DESC) Models Monitoring and Validation Office (GAVM) and
Regulatory and Supervision Monitoring Office (GARS). The Head of the Audit Division (DAU) is a
permanently invited member of the Risk Commission, without voting rights.
Validation and Monitoring of Models Sub-commission
The Models Monitoring and Validation Sub-Commission monitors the performance and confirms the
validity of the rating systems and models used by the Bank within the scope of its risk management
functions (e.g. PD, LGD, CCF, market risk and ICAAP) and informs the Risk Commission on their adequacy.
Moreover, it presents the model’s risk management results and suggests improvement measures to
increase the model’s performance and adequacy.
The CRO is the chairman of the Sub-commission and other members are the Risk Officer, the head of
GAVM, of DCR, of DRAT and of DTMI, as well as the several Model Owners, responsible for developing and
monitoring the risk models of the Bank.
Credit and Non-Performing Assets Monitoring Commission
This Commission is appointed by the EC and has the responsibility of monitoring the evolution of credit
risk, under various aspects:
•Monitoring of the evolution of the credit exposure and the credit underwriting process.
•Monitoring the evolution of the credit portfolio’s quality and of the main performance and risk
indicators.
•Monitor the results achieved by the credit monitoring systems.
•Follow-up the counterparty risk and the largest exposures concentration risk.
•Monitoring the impairment evolution and the main cases of individual analysis.
•Assessment of the recovery procedures performance.
•Monitoring the divestment in the foreclosed assets portfolio.
•Follow-up the execution of the operational plans to be developed within the scope of credit at risk
and reduction of certain asset classes.
The CEO, the CRO, the CRetO and the COO are members of this Commission, as well as, optionally, the
CFO. Any other executive Directors may participate in this body’s meetings if they deem convenient to do
so. The Heads of the following Divisions are also members of this Commission: Risk Office (ROFF), DCR,
DRAT, Specialized Monitoring (DAE), Retail Recovery (DRR), Specialized Recovery (DRE), Legal Advisory
and Litigation (DAJC), Management Information (DIG), Specialized and Real-Estate Credit (DCEI),
Corporate and Business Marketing (DMEN) and Retail Marketing (DMR) . The Head of DAU is a permanently
invited member of the Risk Commission, without voting rights.

2022 REPORT & ACCOUNTS |

|135
Pension Funds Risk Monitoring Commission
This Commission is appointed by the EC and has the following competences:
•Assessing the performance and risk of the Group’s Pension Funds in Portugal;
•Establishing, for these, the appropriate investment policies and hedging strategies.
The Commission members are the CEO, the CFO and the CRO. Any other members of the EC may
participate in the Commission’s meetings, if they deem convenient to do so. The other Commission’s
members are the Heads of the following Divisions: ROFF, Research, Planning and ALM (DEPALM), Wealth
Management (DWM) and Human Resources (DRH). Representatives of the Pension Funds management
entity and of AGEAS Pensões also participate in the Commission’s meetings, by invitation and without
voting rights.
Compliance and Operational Risks Commission
This Commission, appointed by the EC has a number of tasks and responsibilities, with a view to ensuring
that the Bank's activity contributes to an adequate culture of risk and internal control, including ensuring
and monitoring the adoption and compliance by all the Group's institutions with the internal and external
rules that shape its activity, the relevant contractual commitments and ethical values of the
organization, in order to contribute to the mitigation of compliance and operational risks, strengthening
the internal control environment, mitigating or eliminating the imputation of significant sanctions or
property or reputational losses.
The Commission members are the CEO, the COO and the CRO. Any other members of the EC may
participate in the Commission’s meetings, if they deem convenient to do so. The Heads of the following
Divisions are also members of the Commission: COFF, ROFF, DIT, DSI, DSAR, DO, and the Bank ActivoBank.
The Head of DAU, the AML 19 Officer and the managers responsible for the COFF areas that deal with the
matters under discussion are also permanently invited members of this Commission, without voting rights.
Operational Resilience Commission
This Commission is appointed by the EC and has the following capacities and responsibilities:
•Definition of guidelines and approval of the management policies for IT systems, data management
and quality, physical security, business continuity and data protection.
•Regular review of the emerging threats and most relevant trends in terms of data security and
information technologies, with a particular focus upon cyber-security.
•Analysis of the periodical security incident’s reports (regarding systems/data and physical),
identifying the appropriate remediation and improvement measures.
•Monitoring of performance metrics of information security systems, physical security and protection
and data quality;
•Review of the results of information security evaluation and business continuity;
•Follow-up of initiatives and projects in the area of systems/data security, physical security and data
protection and monitoring of the respective performance metrics;
•Approval of the annual plans for the exercises of security assessment, Disaster Recovery Plan (DRP)
and business continuity, and their respective quantitative/qualitative evaluation;
•Articulation with subsidiaries on the themes of physical security policies, information security,
business continuity and protection and data quality.
The Commission members are the CRO, the COO and the CRetO. Any other members of the EC may
participate in the Commission’s meetings, if they deem convenient to do so. The Heads of the following
Divisions are also members of this Commission: COFF, ROFF, DIT, DSI, DSAR, DO and Logistics and
Procurement (DCM) and the Bank AvtivoBank. The head of the Physical Security (DSF), the Data
Protection Officer (DPO) and the Chief Data Officer (CDO) are also permanent members of this
Commission.

| 2022 REPORT & ACCOUNTS

136 |
19 Anti-money laundering.
Corporate Risk Monitoring Commission
This Commission is appointed by the EC and has the following duties and responsibilities:
•Monitor the evolution recorded by the main performing corporate Clients credit exposures,
particularly assessing the implications from the COVID-19 pandemic versus the specific risk factors of
each client (sector of activity, financial standing, cost structure, etc.), issuing opinions regarding the
credit strategy to adopt.
•Follow-up the counterparty risk and the largest exposures concentration risk.
The members of this committee are: the CEO, CRO, CCorpO and CRetO. Any other members of the EC
may participate in the meetings of this Committee, whenever they consider it convenient to do so.
Members of this Committee are also primarily responsible for the following directorates: ROFF, DRE, DCR,
DRAT and DMEN.
CALCO
The CALCO - also referred to as the Capital, Assets and Liabilities Management Commission - is
responsible for the management of the Group's overall capital, for assets and liabilities management and
for the definition of liquidity management strategies at a consolidated level. Specifically, the CALCO is
responsible for the structural management of interest rate and liquidity risks, including, among others,
the following aspects:
•Establishment of management guidelines for assets, liabilities and off-balance sheet items at
consolidated level.
•Definition of the capital allocation and risk premium policies.
•Definition of transfer pricing policy, in particular with regard to liquidity premiums.
•Monitoring of the capital and liquidity indicators, of the Recovery Plan indicators and of the execution
of the Liquidity Plan.
•Definition of policies and strategies to access wholesale funding markets and definition of the liquidity
buffer composition.
•Definition of the investment policy of the Investment Portfolio and monitoring of its performance.
•Definition of the strategy and positioning within the scope of the interest rate risk and structural FX
risk management, as well as of the respective policies and limits, taking into account the market
conditions at any given moment.
The Group CALCO meets every month and is composed of the following executive Directors: CEO , CFO,
CRO and, optionally any other Executive Director. The other members of the Group CALCO are the Risk
Officer, the Chief Economist and the Heads of DEPALM, DIG, DTMI, DWM, DMEN and DMR, the responsible
for the ALM Department of DEPALM.
At Subsidiary Companies Level, the local Credit Commission, CALCO, Risk Control Commission and AML/
CTF Commission replicate the roles of equivalent commissions at BCP level.
Credit Commission
This Commission is appointed by the EC and its functions are to assess and decide on credit granting to
Customers of Banco Comercial Português, in accordance with the competences established by internal
regulation (‘Credit Granting, Monitoring and Recovery’). This commission may also issue advisory opinions
on credit proposals from the subsidiary companies of the Group entities.
The members of this Commission are the CEO, the CCorpO, and the CRO (the former only with veto
rights). Any other Executive Director may, whenever he/she sees fit, participate in the Commission.
Other members are the Heads of the following Divisions: DCR, DAJC, DRAT, Companies Network
Coordination North and Center (DCEN), Companies Network Coordination South (DCES) and Large
Corporates (DCL), as well as Level 3 credit managers and, depending on the proposals to be decided
upon, the coordination managers of other proposing areas (e.g., Private Banking, Retail, Recovery
Department) or members of the subsidiaries’ Credit Commissions. The Risk Officer and the Compliance
Officer are permanently invited members of this Commission, without voting rights. Other Group

2022 REPORT & ACCOUNTS |

|137
Employees may also be invited to participate (without voting rights), if they are relevant for the matters
under discussion.
Risk Office
The Risk Office (ROFF) is the structure unit responsible for the risk control function at Group level,
promoting the overall alignment of concepts and procedures concerning risk monitoring and assessment.
The ROFF is responsible for informing the Executive Committee, the Committee for Risks Assessment, and
the Risk Commission on the general risk level, for proposing measures to improve the control environment
and for the implementation of controls which assure compliance with the approved limits. The ROFF has
the following functions:
•Supporting the establishment of risk management policies and methodologies for the identification,
measurement, limitation, monitoring, mitigation and reporting of the different types of risk.
•Promoting the revision of the Group’s Risk Appetite and the risk identification process.
•Issuing opinions related with the Group Strategic Plan and compatibility of the risk management
decisions considering the approved RAS limits.
•Participate in the definition of the risk strategy and decisions related with risk management.
•Issuing opinions on the assumption of significant risks by the Bank and its subsidiaries, ensuring they
are properly identified and adequately assessed.
•Coordinating the NPA (non-performing assets) Reduction Plan and of the ICAAP and ILAAP processes.
•Ensuring the existence of a body of rules and procedures, of an effective IT platform and of a
database for the robust and complete management of risk.
•Controlling, on an ongoing basis, the evolution of the different risks and compliance with the
applicable policies, regulations, and limits.
•Participating in the Internal Control System.
•Preparing information relative to risk management for internal and market disclosure.
•Supporting the works of the following Commissions: Risk, NPA Monitoring, Pension Funds Risk
Monitoring and participating in the Credit Commission, CALCO, Operational Resilience, Compliance
and Operational Risk and Corporate Risk Monitoring Commission .
The Risk Officer is appointed by the BoD, and reports to the CRO of the Group.
Compliance Office
The Compliance Office (COFF) is part of its organizational structure, construed upon “3 lines of defence
model”. It ensures the compliance function assigned to the “second line of defence”, which includes
control and regulatory compliance activities, analysing and advising the corporate bodies and the various
Divisions of the Bank prior to the making of decisions that may involve the assumption of specific risks
which are monitored by the compliance function.
Furthermore, the COFF has also the mission to:
•Verify if the respective regulatory requirements are complied with, as well as the ethical values of the
organization, fulfilling all the attributions that are legally conferred on it, ensuring the existence of a
culture of internal control, thus contributing to the mitigation of the risk of attribution to the Group
Entities of sanctions or significant assets or reputation damages.
•Promoting the preparation, approval, application, verification of compliance and periodic updating of
the Code of Conduct.
•Ensure compliance with the regulatory framework on the prevention and fight against money
laundering and terrorism financing (hereinafter “AML/CTF”).
•Participate in the definition of policies and procedures related with Conflicts of Interest and
transactions with Related Parties, following-up their implementation and effective application.
•Ensure the management and controls adequacy of the whistleblowing process.
•Provide support to the International Entities in the development of their activities, seeking to
normalise their action principles, systems and processes, in compliance with local regulatory
specifications.

| 2022 REPORT & ACCOUNTS

138 |
The Compliance Officer is appointed by the BoD, reports directly to the Executive Committee and,
functionally, to the Audit Committee, exercising his/her functions in an independent, permanent and
effective manner, defining the policies, guidelines and tools that are appropriate for a proactive and
preventive risks’ assessment.
As a second line of defence structure responsible for compliance risk, for the risks associated with money
laundering and the financing of terrorism, with conduct and market abuse, with conflict of interests and
for other risks of an operational nature, the COFF issues decisions, with binding force for its recipients,
aiming at the legal and regulatory compliance of the various business and business support areas.
The functions attributed to the COFF are exercised in accordance with the law or with other applicable
normative source, as well as by the Bank’s corporate bodies, and the performance of the Compliance
Office should be based on a risk approach, at the level of the business, Customers and transactions,
allowing the identification, assessment, monitoring and control of compliance risks that may influence
the strategy, reputation and objectives defined for the Bank.
Within the scope of opinions and the associated analyses produced at request of several Group areas and
Divisions, the COFF:
•Identifies and evaluates the various types of risks – either concerning in what refers to products and
services approval process, corporate processes and conflicts of interest;
•Issues proposals for the correction of processes and risks mitigation;
•Permanently analyses the general supervisory environment and, in general, provides specialised
support in matters of control and regulatory compliance.
Within the scope of its specific functions, the COFF also ensures an assessment and intervention in what
concerns:
•The control and monitoring of compliance risks;
•The Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT);
•The mitigation of reputation risk at all Group entities, aiming at the alignment of concepts, practices
and goals in these matters.
In compliance with the Principle of Coherence of the Group's internal control, the 1st responsible for the
Compliance Officer of BCP is also responsible for the follow-up and monitoring of the compliance
activities and Policies at Group level, highlighting the follow-up and monitoring of the AML/CFT risk
through the International AML/CFT Committees, with the participation of the management and
Compliance Bodies of the local units.
The COFF is also responsible for coordinating the process of structuring, drafting and approving the
annual self-assessment reports on the effectiveness of the organisational culture and the governance and
internal control systems, both individual and consolidated, and on the ML/FT prevention system to be
submitted to the Banco de Portugal and the Securities Market Commission, under the terms of the
respective Notices and Regulations, and as well for the preparation and submission of reports to the
management body, at least once a year, identifying the compliance flaws verified and the
recommendations issued for their correction.
The COFF fosters, intervenes and actively participates in the training policy of Employees, namely,
through training actions in Compliance, for the entire universe of the Group, maintaining a large
knowledge repository for matters of its competence, namely, in what concerns the AML/CFT.
Audit Division
The Audit Department (DAU) provides functions of the third line of defence, under the scope called
"Model of the 3 lines of defence" and is responsible for assessing the adequacy and effectiveness of the
risk management process, the internal control system and the governance models. DAU performs its
function on a permanent and independent basis and in accordance with the internationally accepted
principles and best practices of internal auditing, carrying out internal audit inspections to assess the
systems and processes of internal control and risk management which can give rise to recommendations
aimed at to improve its efficiency and effectiveness.
The main functions of the DAU in the scope of risk management are to ensure that:

2022 REPORT & ACCOUNTS |

|139
•The Risks are properly identified and managed and that the controls implemented are correct,
adequate and proportional to the Bank's risks.
•The Bank's internal capital assessment system is adequate in terms of the risk exposure level.
•Transactions are recorded correctly in the systems of the Bank, and the operational and financial
information is true, appropriate, material, accurate, reliable and timely.
•The Employees perform their duties in accordance with internal policies, codes of conduct, rules and
procedures and with the legislation and other applicable regulations.
•The goods and services necessary for the Bank's activity are purchased economically, are used
efficiently and are properly protected.
•The Legal and regulatory provisions with a significant impact on the organization are recognized,
properly assimilated, and integrated into the operational processes.
•The Bank's governance model is adequate, effective, and efficient.
The Head of DAU reports hierarchically to the Chairman of the Board of Directors and functionally to
Audit Commission, is responsible for the general supervision and coordination of the internal audit
activities of the BCP Group subsidiaries and attends the meetings of the Audit Committee of the
subsidiaries of the BCP Group.
Main developments and accomplishments in 2022
In 2022, the Risk Management Function maintained focused on the continuous improvement of the Group's
risk control framework, on permanently monitoring the risk levels in relation to the RAS tolerance limits,
while ensuring, at the same time, full compliance with regulatory and supervisory requirements, updating
the internal risk management, control policies and regulations.
The most relevant activities developed during 2022 were, synthetically, as follows:
•Realization of the Risk Identification Process (RIP) and subsequent update of the Risk Appetite
Statement (RAS) and of the Risk Strategy to 2023;
•Monitoring the level of compliance with risk limits, in particular the RAS, at consolidated and at the
main geographies level;
•Development and validation of new methodologies for calculating economic capital;
•Completion of the ICAAP and ILAAP reports, while performing their ongoing monitoring to ensuring the
Group's capital adequacy and liquidity continuously. Participation in other planning processes carried
out, namely the Funding and Capital Plan;
•Continuous improvement of the internal governance model, management, measurement and risk
control at Group level, with special focus on strengthening the credit risk function monitoring and the
inclusion of climate and environmental risk factors in the risk management framework;
•Consolidation of the customers’ monitoring model, with the objective of identifying and close
monitoring the customers potentially most affected by the macroeconomic context, anticipating
possible difficulties in fulfilling their responsibilities;
•Extension of the process of attribution of pre-defined credit strategies to almost all corporate
segment clients, assigning with differentiated review periods according to the selected strategy’ level
of risk . A periodic revision of the macroeconomic environment in which companies develop their
activities, is made with a view to identifying potentially more vulnerable sectors at each moment;
•Revision of the impairment and overlays models to incorporate the most critical risk factors arising
from the current macroeconomic and geopolitical environment;
•Production of the annual self-assessment reports of the Risk Management Function of BCP and
ActivoBank;
•Review, update and implementation of the NPA/NPE Reduction Plan;
•Pursuit the plan for the integration of sustainability themes (ESG) in the Bank's risk management
framework and monitoring its implementation within the Bank's RAS;

| 2022 REPORT & ACCOUNTS

140 |
•Carrying out the ECB's climate stress tests exercise and further development of the framework for
governance and control of climate risks;
•Continuous improvement of liquidity and funding risk management and control systems at Group level,
including the review of the internal liquidity stress testing process, the improvement of the liquidity
risk management framework in Poland and Mozambique and the definition of a liquidity management
model in the context of resolution planning;
•Participation in the SSM Liquidity Exercise of the ECB;
•Provision of requirements for the integrated reporting to the Single Resolution Board;
•Reinforcement of the market risk monitoring and control processes and continuation of the FRTB
implementation project - Fundamental Review of the Trading Book;
•Continued ongoing improvement of data quality to support decisions and risk control metrics
according to BCBS239 and development of the technology platform upgrade to support management
risk;
•Continuous improvement of the quality and scope of reporting information to the Management Bodies
and Specialized Committees and Commissions, Supervisory entities and disclosure to the market;
•Monitoring and redevelopment of the model to support the calculation of regulatory capital
requirements (IRB model);
•Presentation of the results for the 2021 Risk Self-Assessment exercise of operational processes, which
confirmed the moderate operational risk levels;
•Consolidation of the outsourcing risk management and monitoring, in conjunction with the Contract
Managers and the 1st line of defence organizational units;
•Global review of key risk indicators (KRI) of the Bank's activity support processes;
•Simulation of the new regulatory capital methodology for operational risk, within an exercise/
questionnaire conducted by the ECB.
•Participation in the update of the Group Recovery Plan 2022;
•Follow up of the several On-Site Inspections and Deep-Dive exercises of Supervisory Entities.
In 2022, the compliance function maintained its focus on the continuous improvement of the Group's
compliance risks´s control environment, ensuring, full fulfillment with regulatory and supervisory
requirements and updating the internal regulation’s structure that is appropriate for compliance risk
management and control.
The most relevant activities and initiatives developed during 2022 were, as follows:
•In the context of AML/CFT, the COFF's action, based on a risk-based approach, focused on complying
of the following duties:
•Of identification and diligence, for the appropriate pre-validation, substantive and formal, of
opening and maintaining entities and accounts and credit operations, in a context of increased
risk, highlighting the effect of the war in Ukraine.
•Of examination of operations, highlighting the process of filtering operations, an essential process
for compliance with the systems of sanctions and embargoes decreed by the competent national
and supranational authorities, and their monitoring, with a view to detecting and preventing
potentially irregular situations.
•Of control, with the improvement of IT systems and monitoring mechanisms, adapting them to the
new regulatory requirements and new risk factors, contributing to the effectiveness of the AML/
CFT risk management model.
•Of communication, by adopting appropriate governance and processes, to timely inform the
competent authorities whenever there are suspicions or sufficient reasons to suspect that certain
funds or other assets, regardless of the amount or value involved, come from criminal activities or
are related to financing, in a context of growing risk factors in this area.
•Of training, by complying with a training and communication plan.
•Compliance with the AML/CFT duties defined by law is based on dedicated technological solutions, in
the definition and management of risk models in accordance with the evolution of the various
competing variables for the establishment of scorings to be applied to operations. Also noteworthy is

2022 REPORT & ACCOUNTS |

|141
the development of new, more efficient solutions, based on automation processes for the analysis of
risk factors inherent to new account openings and transaction screening, and the effort to update
internal rules to align them with recent changes in the legislative environment. Among the various
initiatives undertaken in 2022, we highlight the following:
•The implementation of automatic transaction filtering processes to ensure permanent and timely
compliance with the sanctions and embargoes decreed by the various international institutions, in
a more demanding international context resulting from the war in Ukraine.
•The reinforcement of the control of the AML/CFT risk in terms of Customer onboarding, regarding
the segments and jurisdictions involved in the business relationships.
•Optimisation of the alarm system and monitoring of business relations with the objective of
increased efficiency in the alerts generated.
•The implementation of a new AML/CFT Client risk model, which includes a new sets of risk factors,
in compliance with the latest regulatory requirements.
•The implementation of a new technological platform and a process that promotes the updating of
Customers' information and supporting documentation in the Bank, in compliance with AML/CFT -
related regulations.
•The strengthening of controls over Correspondent Banks, ensuring a timely periodic review of their
AML/CFT practices and policies according to their risk, whose assessment began to include a set of
new risk factors, in compliance with recent regulatory changes.
•The continued strengthening, training and specialization of the Compliance Office teams within
the scope of AML/CFT, in its various dimensions.
•Implementation of the Training and Communication Plans on compliance matters for all the Bank's
Employees and commercial structures, with the most important aspects to be taken into account both
in terms of the risk of financial crime and in terms of other compliance and regulatory risks.
•Regarding the updating of internal regulations, of particular note is the Policy on Preventing and
Combating Money Laundering and the Financing of Terrorism, mainly with the aim of accommodating,
in the light of Notice no. 1/2022 of the Bank of Portugal and the EBA Guidelines on policies and
procedures in relation to compliance management, the new powers attributed to the Bank's
Management and Supervisory Bodies, as well as to the Compliance Officer.
•Proceeding with the alignment of strategies and priorities in the risk management of the Group's
Operations, efforts continued to update the group's policies, also applicable to International
Operations. In addition, the COFF strengthened its monitoring of the compliance function's activity in
those Operations, implementing a series of initiatives, of which the following are highlighted.
•Reinforcement of the Compliance Office Team, in Portugal, which supports the International
Operations, scaling and adapting its response capacity to the challenges that Compliance and
regulatory issues have been posing.
•Operationalisation of obtaining the consent of the Customers of its operations abroad, or of the
respective Supervisors, to have access to Customer and operations data, which allow their analysis by
BCP, both in the establishment of new business relationships and in the subscription of products with
increased risk, which was complemented with access to the AML/CFT systems and applications of the
units located in third countries.
•Issue of monthly analysis reports on the movement of high-risk accounts and high-risk customer
transactions for higher risk operations.
•Updating the methodology for assessing the AML/CFT risk of international operations, using the
independent assessment of an external auditor.
•Improvement of the AML/CFT risk assessment model of international operations, including new risk
factors and assessment metrics, in compliance with the applicable related regulations.

| 2022 REPORT & ACCOUNTS

142 |
Credit risk
The materialisation of this risk arises from the losses occurred in the loan portfolio, due to the incapacity of
borrowers (or their guarantors, when applicable), issuers of securities or contractual counterparts to comply
with their credit obligations.
The control and mitigation of this risk are carried out through a solid and reliable structure of risk
analysis and assessment, based on internal rating systems suited to the different business segments,
through a model for the early detection of potential default of the portfolio, through processes regarding
the management and follow-up of the collateral value and through structural units that are exclusively
dedicated to credit recovery, for non-performing situations.
Evolution and breakdown of the loan portfolio
The next table presents the evolution of the Group's portfolio subject to credit risk and counterparty
credit risk between December 31, 2021 and December 31, 2022, in terms of EAD (Exposure at Default) (*),
in the three main geographies in which the Group operates - Portugal, Poland and Mozambique - which
represented the Group's total EAD by December 31, 2022.

|  |  |  | (million euros) |
Geography | Dec. 22 | Dec. 21 | Change |
Amount | % |
Portugal | 61,716 | 65,881 | (4,165) | (6.3)% |
Poland | 24,023 | 23,281 | 742 | 3.2% |
Mozambique | 2,446 | 2,377 | 69 | 2.9% |
TOTAL | 88,185 | 91,539 | (3,354) | (3.7)% |

* The EAD represents the expected exposure if the customer defaults. For commitments and financial guarantees, the value of the EAD
will consider both the amount of credit used and the expectation of future potential value that may be used in accordance with the
agreement.
Without impairment deduction to the exposures treated prudentially under the Standardized Approach (STD) and including all risk
classes (i.e. besides credit to Customers, debt positions from Sovereign entities and Institutions are included).
Considering the position on December 31, 2021 as a basis for comparison, the Group's loan portfolio,
measured in euros (EUR), registered a decrease of 3.7% during 2022, contrary to that verified in 2021
(growth of 9.3%). This evolution is explained by a decrease in Portugal, with growth in the other
geographies.
The reduction of the portfolio in Portugal is closely associated with the liquidation, at the end of 2022, of
TLTRO III and the subsequent impact of that decision on the reduction of exposure to Banco de Portugal
and Sovereigns. Additionally, should be noted the decrease in non-performing loans, particularly in the
Corporate segments, which contributed to NPE portfolio´s reduction in Portugal by 517 million euros
(direct credit) during 2022.
In Poland's loan portfolio there was an increase of 3.2%, measured in euros, largely explained by the
increase in exposure to the Polish Central Bank, which amounted to approximately 1.9 billion euros,
countered by a decrease in credit exposure to Corporate and Retail credit, which amounted to 1.1 billion
euros.
With respect to Mozambique, there is an increase in the loan portfolio of 2.9%, measured in euros, mainly
related to the effect of the exchange rate appreciation of the Mozambican currency, countered by a
decrease in the exposure in dollars to Institutional Clients.
The portfolio composition by risk classes is illustrated by the following graphs, representing the portfolio
structure on December 31, 2022:

2022 REPORT & ACCOUNTS |

|143
In what concerns the structure of portfolios by counterparty segment, in Portugal the most significant
portion continues to be assumed by the retail segment with 41.6% of the total, 32% of which relates to
exposures related to mortgages. The Corporate segment has a weighting of around 28.7%, slightly lower
than at the end of 2021, highlighting the decrease in the weight of the Banks and Sovereigns segment,

| 2022 REPORT & ACCOUNTS

144 |
which recorded a decrease in its representativity to a level close to 29.7%, from a weight of 32.5% at
December 31, 2021.
In Poland we highlight the Retail segment, with a weight of 59%, observing a slight decrease in the weight
of exposures collateralized by mortgage guarantee to 30.2%, an equally slight reduction in the
representativeness of the Corporate segment and an increase in the Banks and Sovereigns component,
ending 2022 with weightings of 14.3% and 26.8%, respectively.
Regarding Mozambique, the structure remained stable, with emphasis on the relevance of the weight of
the Banks and Sovereigns segment, which rose to 79.9% of the portfolio. The Corporate and Retail
segments assumed a representativity of 12.3% and 7.8%, respectively.
Given the changes in the global environment since the beginning of 2022, the Bank has changed the
sectors considered in Portugal as the most vulnerable. In fact, while it is admissible to consider that the
effects of the pandemic have faded, new risks have emerged, with special emphasis on those resulting
from the Russia/Ukraine geopolitical conflict, which have reinforced threats already emerging in areas
such as constraints in logistics and distribution chains, limitations in access to raw materials and certain
goods and increased energy costs. These risks continued during the second half of the year, and there are
currently no prospects for a resolution of the biggest disruptive factor in the global environment, linked
to the aforementioned conflict.
Probability of Default (PD) and Loss Given Default (LGD)
The main parameters for credit risk assessment, used in the calculation of Risk Weighted Assets (RWA)
within the scope of the Internal Ratings Based method (IRB) - the Probability of Default (PD) and the Loss
Given Default (LGD) – assigned to the portfolio’s credit operations, have been registering a continuous
positive evolution, reflecting a clear trend of improvement in the portfolio’s quality.
The following graph illustrates the distribution of the portfolio amounts, in terms of Exposure at Default
(EAD) by the risk grades (internal ratings) attributed to the holders of credit positions in Portugal and
Poland, on December 31, 2022. These risk grades (RG) are defined on an internal scale, transversal to the
Group (the Rating Master Scale), with 15 grades, corresponding to different levels of debtors' PD. Risk
grades 13 to 15 are called “procedural” and correspond to problematic credit; RG 15 corresponds to the
Default status.
As shown in the above chart, the weight of the EAD corresponding to medium and higher quality risk
grades, for the two geographies in consideration, represented 82.3% of total EAD at December 31, 2022,
with the structure remaining close in both geographies, with a slight decrease in the weight of risk grades

2022 REPORT & ACCOUNTS |

|145
between 1 and 6 in the case of Poland, where there was a decrease in this segment of risk grades, while
in Portugal the weight of this segment increased to 64.2%. This weighting compares with year-on-year
weights of 80.9%, 80.7%, 76.8% and 73.6% at the end of 2021, 2020, 2019 and 2018, respectively,
reflecting a consistently positive evolution.
Regarding the weight of exposure in the set of the two main geographies corresponding to customers with
procedural risk grades (without access to new credit), it reached 4.2% at December 31, 2022, maintaining
the downward trajectory that had already been in place in previous years: 4.8% (2021), 5.9% (2020), 7.8%
(2019) and 11.3% (2018). In the case of Portugal, the trend towards an accelerated reduction in exposure
to clients with procedural risk grades also continued: 3.7% (2022), 4.7% (2021), 6.1% (2020), 8.8% (2019)
and 12.8% (2018).
Regarding the LGD parameters, representative of expected losses in case of Default and which, to a good
extent, reflect not only the efficiency of credit recovery according to the different types of credit
segments/products, but also the collateralization levels of credit operations, the following table shows
the respective average values (weighted by EAD) at the end of 2022 and 2021:

| Mortgages | SME Retail | Retail (other) | Real Estate Promotion | SME Corporate | Corporate | GLOBAL AVERAGE
2022 | 16,2% | 32,1% | 34,6% | 37,0% | 46,0% | 32,4% | 25,4%
2021 | 16,2% | 32,1% | 34,6% | 35,5% | 46,3% | 34,4% | 26,6%

Thus, in 2022, LGD parameters in Portugal show values close to those at the end of 2021, improving
slightly in the companies' segments.
It should also be noted that more than 1/3 of the loans' to companies portfolio in Portugal benefits from
guarantees issued by various entities (Mutual Guarantee Societies; European Investment Fund and
European Investment Bank), which provide an additional level of protection in the case of default events.

| 2022 REPORT & ACCOUNTS

146 |
Main credit risk indicators
The following chart presents the quarterly evolution of the main credit risk indicators, between
31/12/2021 and December 31, 2022, for the Group and the portfolios of Portugal, Poland and
Mozambique:

| Dec 22 | Sep 22 | Jun 22 | Mar 22 | Dec 21
CONSOLIDATED |  |  |  |  |
NPE/Gross credit | 3.80% | 4.10% | 4.30% | 4.60% | 4.70%
NPL > 90 days / Gross credit | 0.90% | 1.10% | 1.10% | 1.50% | 1.60%
Past due credit / Gross credit | 1.00% | 1.20% | 1.30% | 1.70% | 1.90%
Impairment / Gross credit | 2.60% | 2.70% | 2.80% | 3.10% | 3.20%
PORTUGAL |  |  |  |  |
NPE/Gross credit | 3.40% | 3.70% | 4.00% | 4.40% | 4.70%
NPL > 90 days / Gross credit | 0.40% | 0.70% | 0.70% | 1.30% | 1.50%
Past due credit / Gross credit | 0.50% | 0.80% | 0.80% | 1.30% | 1.50%
Impairment / Gross credit | 2.30% | 2.50% | 2.60% | 3.00% | 3.20%
POLAND |  |  |  |  |
NPE/Gross credit | 4.50% | 4.50% | 4.30% | 4.50% | 4.40%
NPL > 90 days / Gross credit | 1.60% | 1.70% | 1.60% | 1.80% | 1.80%
Past due credit / Gross credit | 2.00% | 2.10% | 2.20% | 2.40% | 2.40%
Impairment / Gross credit | 3.10% | 3.10% | 2.90% | 3.10% | 3.00%
MOZAMBIQUE |  |  |  |  |
NPE/Gross credit | 16.30% | 14.80% | 16.40% | 16.10% | 15.90%
NPL > 90 days / Gross credit | 7.80% | 8.90% | 9.10% | 8.20% | 8.00%
Past due credit / Gross credit | 7.80% | 9.00% | 9.20% | 8.40% | 8.10%
Impairment / Gross credit | 8.10% | 10.00% | 9.80% | 9.10% | 8.30%
Gross credit = Direct credit to clients, including credit operations represented by securities, before impairment and fair value adjustments. NPE include loans to Customers only.

The evolution of credit risk indicators during 2022 was favorable at the consolidated level and particularly
in Portugal and registered a slight deterioration in Mozambique, as regards the 'NPE/Gross Credit' ratio.
The overall evolution is positive as evidenced in the 'NPE/Gross Credit' ratio with a reduction of 0.9
percentage points at the consolidated level and 1.3 percentage points in Portugal. The same favorable
evolution can be observed in the ratio of Overdue Loans and 90 Day Overdue Loans to Gross Loans at the
domestic and consolidated levels, registering this indicator a value of less than 1% at consolidated level
and only 0.4% in Portugal.
The positive dynamics of these ratios result mainly from the continued effort pursued in recent years to
reduce loans classified as non-performing.
The very low value of the overdue credit ratio in Portugal (0.4%) when compared to the NPE ratio (3.4%)
shows that a very significant part of the NPE ́s portfolio is associated with "unlikeness to pay" situations".
It should also be noted that between the end of 2021 and 2022 the consolidated 'Impairment/Gross Credit'
ratio was reduced by 0.6 points, as a result of the reduction in the relative weight of the default credit
portfolio.
In Poland there was a slight increase of 0.1 percentage points in the 'NPE/Gross Credit' indicator, but
there was an improvement in the ‘Past due 90 days/Gross Credit' and ‘Past due Credit/Gross Credit' ratios
(down 0.2 and 0.4 percentage points, respectively).
Reflecting the persistence of a challenging economic and financial environment, the operation in
Mozambique recorded a deterioration in the 'NPE/Gross Credit' ratio of 0.4 percentage points and an
improvement in the remaining credit risk indicators during the year 2022, as a result of a conservative
policy of granting new credit.

2022 REPORT & ACCOUNTS |

|147
NPA Reduction Plan
The implementation of the Group's NPA (non-performing assets) Reduction Plan remained a priority
throughout 2022, in its two aspects - problematic loans (NPE-non performing exposures) and assets
received as repayment of loans (FA-foreclosed assets) - focusing mainly on the NPE loan portfolios and FA
properties held for sale, in Portugal.
The NPA Reduction Plan is framed by a specific governance model and a robust management framework,
based on specialized credit recovery areas and systematized recovery strategies - both resulting from
automatic analysis and decision models (for Retail) and based on the relationship of the recovery
managers with their Corporate Clients, with tailor-made solutions. In order to respond to the challenges
posed by changes in the business environment, particularly the COVID-19 pandemic, the current Russia/
Ukraine war and disruptions in logistics and distribution chains, the Bank has been developing and
strengthening the methodologies and installed capacity of the monitoring and recovery areas, in order to
ensure adequate monitoring of the most potentially impacted exposures and to minimize expected losses.
The FA management is based on a specialized structure, privileging circuits and procedures oriented
towards the speed of the reception-preparation-sale cycle and the enhancement of the properties’
values, in order to facilitate the sale of these assets.
The NPA Reduction Plan is supported by a set of operational initiatives designed with the objective of
promoting an increasing effectiveness in the management of credit processes and foreclosed asset
management.
The fulfilment of the reduction targets of each area involved in the reduction of NPA is measured on a
monthly basis and reported to senior management, namely to the Credit and Non-performing Assets
Commission.
The following table presents the evolution of NPE volumes between December 31, 2021 and December 31,
2022, for the Group and for Portugal:

|  |  |  | (Million euros)
| Dec 22 | Sep 22 | Jun 22 | Mar 22 | Dec 21
CONSOLIDATED | 2,218 | 2,424 | 2,502 | 2,679 | 2,752
Change YoY | -535 |  |  |  | -543
PORTUGAL | 1,361 | 1,537 | 1,635 | 1,788 | 1,878
Change YoY | -517 |  |  |  | -485

Comparing the size of the exposure of Customers classified as NPE at the end of 2022 with that at the end
of 2021, there is a very positive evolution, with a reduction of 535 million euros at the consolidated level
and 517 million euros in the activity in Portugal, corresponding to a contraction of 19.4% and 27.5%,
respectively. This result reflects the maintenance of the successful path taken over the last few years in
identifying and implementing solutions that enable the reduction of these non-productive assets, even in
an adverse context.
It should be noted that the evolution described above was consistent with expressive values in all
quarters of the year.
With regard to the type of operations that explain the reduction of NPE in Portugal in 2022, the chart
below shows the contribution of write offs, which amounted to 428 million euros. Gross sales amounted
to 282 million euros, with the combined effect of the other origins of NPE reduction and new entries had
an upward impact of 194 million euros, marked by a small number of cases of greater exposure that were
classified as NPE.
(million euros)

| 2022 REPORT & ACCOUNTS

148 |
Despite the weight of the reduction of NPE due to write offs, the effort to reinforce impairment allowed
the coverage ratio of the NPE portfolio by impairment in Portugal to increase slightly to 69%. The
following graph, which refers to domestic evolution, shows the decrease of four percentage points in the
NPE´s total coverage (by impairments + collaterals) to 126% at the end of 2022, explained by the
reduction in the weight of collateral coverage.
The trend observed in 2022 regarding assets on the balance sheet resulting from credits repayment
(foreclosed assets - FA) was favorable, as shown in the following table, which presents the evolution of
the total stock of FA in Portugal and its breakdown into the different types of assets, as well as the
aggregate value of assets of this nature of subsidiaries abroad (amounts before impairment):

2022 REPORT & ACCOUNTS |

|149

|  |  |  | (Million euros)
| Dec. 22 | Dec. 21 | Dec. 20 | Dec. 19
Real estate properties | 262 | 565 | 809 | 1,020
Real estate Funds and companies | 182 | 205 | 246 | 306
Other assets (non-Real estate) | 73 | 81 | 92 | 87
SUB-TOTAL - Portugal | 517 | 851 | 1,146 | 1,413
Other geographies Foreclosed Assets | 65 | 65 | 40 | 52
GROUP TOTAL | 582 | 916 | 1,186 | 1,465

Compared to the position at the end of 2021, there was a 36.5% reduction in the FA portfolio on
December 31, 2022. The overall value of the reduction in Portugal corresponded to an amount of 334
million euros, essentially explained by the real estate component, which amounted to 303 million euros.
During 2022, the Bank continued its efforts to reduce the portfolio of non-current assets held for sale, in
particular properties received as a payment in kind.
In this year it should be highlighted the decrease in the stock of these assets in the gross amount of 334
million euros, based on the reinforcement of commercial sales dynamics with a relatively low volume of
new entries, which are explained by the reduction in the size of the NPE credit portfolio, the sale of
credit portfolios to companies with real estate collateral in previous periods and the adequate
functioning of the judicial sale instruments to third parties. The assets received in 2022, amounting to 20
million euros, are mainly composed by granular and residential and commercial properties with good
liquidity.
It should also be noted that the reduction in the gross values of the foreclosed assets portfolio was
accompanied by a strengthening of the level of coverage of the portfolio by impairments, from 30% in
December 2021 to 38% in December 2022.
It is also worth noting the reduction in the volume of properties being prepared for sale, to 94 million
euros by the end of 2022.

| 2022 REPORT & ACCOUNTS

150 |
Credit concentration risk
The following chart presents the weights, in total exposure, of the Group’s 20 largest performing
exposures (non-NPE), as at December 31, 2022, in terms of EAD and using the concept of “Groups of
Clients/Corporate Groups”, excluding the risk classes of “Banks and Sovereigns”:

| Dec. 22 | Dec. 21
Client Groups | Exposure weight in total (EAD) | Exposure weight in total (EAD)
Client group 1 | 0.9% | 0.7%
Client group 2 | 0.8% | 0.5%
Client group 3 | 0.7% | 0.4%
Client group 4 | 0.4% | 0.4%
Client group 5 | 0.3% | 0.4%
Client group 6 | 0.3% | 0.4%
Client group 7 | 0.3% | 0.3%
Client group 8 | 0.3% | 0.3%
Client group 9 | 0.3% | 0.3%
Client group 10 | 0.3% | 0.3%
Client group 11 | 0.3% | 0.3%
Client group 12 | 0.2% | 0.3%
Client group 13 | 0.2% | 0.2%
Client group 14 | 0.2% | 0.2%
Client group 15 | 0.2% | 0.2%
Client group 16 | 0.2% | 0.2%
Client group 17 | 0.2% | 0.2%
Client group 18 | 0.1% | 0.2%
Client group 19 | 0.1% | 0.2%
Client group 20 | 0.1% | 0.1%
Total | 6.4% | 6.1%

Overall, the 20 largest productive exposures represented 6.4% of total EAD on December 31, 2022,
compared with a weight of 6.1% on December 31, 2021. Hence, there was a slight increase in the
concentration of credit in the 20 largest productive exposures, measured in terms of EAD.
It should be noted that, in addition to complying with the regulatory limits on Large Exposures, the Group
defines specific objectives for controlling credit concentration, materialized into RAS metrics.
Furthermore, other indicators are periodically monitored for various types of credit concentration: single-
name, by sectors of activity, by country, for Institutions and for Sovereign risks.
In the case of the single-name concentration, the limits are defined for performing Clients, since the NPE
are covered by the NPA Reduction Plan. For Clients with exposure above the established limit excess,
specific reduction plans are drawn-up.

2022 REPORT & ACCOUNTS |

|151
Operational risk
Operational risk materializes in the occurrence of losses resulting from failures or inadequacies of
internal processes, systems or people, or resulting from external events.
In the management of this type of risk, the Group adopts duly documented principles and practices,
promoting the continued improvement of the control environment. This framework has a variety of
features, such as: functions segregation, definitions for lines of responsibility and respective
authorisations’ levels, tolerance limits for exposure to risks, appropriate internal regulations’ framework
(including ethical codes and codes of conduct), risks self-assessment (RSA) exercises, key risk indicators
(KRI), access controls (physical and logical), reconciliation activities, exception reports, loss events data
capture, a structured process for new products and services approval, contingency plans, contracting of
insurance (for the total or partial transfer of risk), follow-up of the Bank’s outsourcing contracts and
internal training on processes, products and systems.
The operational risk management framework encompasses the three relevant Group geographies –
Portugal, Poland and Mozambique – and the operational risk management system adopts the 3 lines of
defence model, based on an end-to-end processes' structure. Each geography adapts its own processes'
structure, which is regularly reviewed/updated. This approach, transversal to the functional units of the
organisational structure, is appropriate for the perception of risks and to implement the corrective
measures for their mitigation. Furthermore, this processes’ structures also support other initiatives, such
as the actions to improve operating efficiency and the management of business continuity.
The responsibility for the day-to-day management of operational risk lies with the 1st line of defence,
with special relevance of the operations’ areas and the process owners (seconded by process managers),
whose mission - beyond the management of their processes’ effectiveness and efficiency - is to
characterise the operational losses captured under their processes, to monitor the respective KRI, to
perform the RSA exercises, as well as to identify and implement appropriate actions to mitigate
operational risk exposures, thus contributing to the strengthening of control mechanisms and the
improvement of the internal control environment.
Operational Risks Self-assessment (RSA)
The RSA exercises are based on workshops, attended by the Risk Office and with the participation of the
process owners (and process managers), or performed through answers to questionnaires sent to the
process owners, for a review of previous RSA results, according to predefined updating criteria.
The aim of the RSA exercises is to promote the identification and mitigation (or elimination) of risks,
either actual or potential, in each process, through the assessment of each of the 20 subtypes of
operational risk considered:

R1 Internal fraud and theft | R11 Monitoring and reporting errors
R2 Execution of unauthorised transactions | R12 Customer related errors
R3 Employee relations | R13 Products or services flaws/errors
R4 Breach of work health & safety regulations | R14 External fraud and theft
R5 Discrimination over employees | R15 Property and disasters risks
R6 Loss of key staff | R16 Regulatory and tax risks
R7 Hardware and Software | R17 Inappropriate market and business practices
R8 Communications infrastructure | R18 Project risks
R9 Systems security | R19 Outsourcing related problems
R10 Transaction, capture, execution & maintenance | R20 Other third parties’ related problems

The assessments are positioned in a risk tolerance matrix, considering the ‘worst-case event’ that might
occur in each process, for three different scenarios: Inherent Risk (without considering the existing/
implemented controls), Residual Risk (considering the existing/implemented controls) and Target Risk
(the desirable risk level). These exercises are typically carried out in the second half of each year.
The 2022 RSA exercise for operational risk processes incorporated:
•The results of the Information and Communication Technology (ICT) risks RSA computed in the
beginning of the year, as input information to process owners, regarding 3 of the 20 risks assessed.
The ICT risks RSA was made over 155 critical technological assets – hardware, software and

| 2022 REPORT & ACCOUNTS

152 |
communication lines and infrastructures – under 3 evaluation dimensions: availability/integrity/data
confidentiality;
•The input stemming from the CORPE (Compliance and Operational Risk Process Evaluation) factors,
which introduce and highlight operational risk components that result from the compliance and
internal control status of the processes.
In addition, the process owners were also asked to indicate, for their processes and according to a prior
mapping for certain risks, the relevance of the most serious scenarios evaluated in the context of a self-
assessment exercise carried out by the Information Security Division (DSI), on risk scenarios
(vulnerabilities/threats) identified for information assets. This new element introduced in the RSA
exercise allows for greater awareness of process owners in relation to information security risks (as
potential input of risk assessment in processes) as well as feedback from process owners regarding
identified and global and previously assessed risk scenarios.
The results of the RSA covering the operational processes of Portugal, Poland and Mozambique, for the 20
risk sub-types assessed, point to moderate operational risk levels. In Portugal, on a total of 2164
applicable risks, only 27 residual risks were classified as medium/high (score of 3 or 4, in a scale of 0 to
5, in which 0 = risk not applicable and 5 = catastrophic risk). In Poland and Mozambique, the number of
medium/high residual risks was of, respectively, 50 (out of 1649 applicable risks) and 15 (out of 456
applicable risks).
Operational losses capture
The operational losses data capture (i.e. the identification, registration and typification) of operational
losses and of the originating events aims at the strengthening of the awareness to this risk and to provide
relevant information for process owners to incorporate within their process management. As such, it is an
important instrument to assess risk exposures as well as for a generic validation of the RSA results.
The detection and reporting of operational losses is a responsibility of all Employees of the Group, the
process owners playing a crucial role in the promotion of these procedures within the context of the
processes for which they are responsible.
The identified events in which the losses, effective or potential, exceed the defined materiality limits
(for each geographical area) are characterised by the process owners and process managers of the
processes to which the losses are related, including the description of the respective cause-effect and,
when applicable, the valuation of the loss and the description of the improvement action identified to
mitigate the risk (based on the analysis of the loss cause). For losses of amounts exceeding certain
thresholds, “Lessons Learned” reports are presented to and discussed at the specialised Compliance and
Operational Risks Commission). The lessons learned reports include an action plan to mitigate the risks
that led to the losses, where appropriate.
The following graphs present the profile of the losses captured in the respective database in 2022:
LOSSES AMOUNTS DISTRIBUTION
By cause

2022 REPORT & ACCOUNTS |

|153
LOSSES AMOUNTS DISTRIBUTION
# of events by amount range
LOSSES AMOUNTS DISTRIBUTION
By business line
Regarding the profile of losses recorded in 2022, illustrated by the graphs above, it was decisively
influenced by the recording of operating losses related to foreign currency mortgage cases (typically in
Swiss francs) of Bank Millennium (Poland).
Losses associated with lawsuits decided unfavorably for Bank Millennium were recorded as losses
associated with operational events, influencing the relative weight of losses associated with
organizational risks of Retail Banking.
In what concerns the distribution of losses by class of amount (in number of losses), there was no change
in the typical profile of the distribution of operating losses.

| 2022 REPORT & ACCOUNTS

154 |
Key risk indicators (KRI)
KRI provide alerts concerning changes in the profile of the operational risks or in the effectiveness of
controls, thus enabling to identify the need to introduce corrective actions within the processes, in order
to prevent potential risks from materialising into losses. These indicators currently encompass all
processes in the main Group operations (Portugal, Poland and Mozambique).
Processes management also uses Key Performance Indicators (KPI) and Key Control Indicators (KCI), the
monitoring of which, even if oriented towards the assessment of operative efficiency, also contributes for
the detection of risks.
Business continuity management
In 2022, in Portugal, it was formally established the remote work as a strategy of recovery of business in
the central services, after the implementation of the transversal hybrid work model (remote + face-to-
face, with intra-team turnover). Thus, the distribution of employees between two different locations -
the Bank's home and facilities - on a daily basis, reinforced the operational continuity capacity of critical
teams and processes, thus reducing maintenance costs related to alternative workplaces in case of
contingency on the facilities. This allowed the reduction of 9 to 4 places of recovery of business,
equivalent to a reduction of 19% of dedicated recovery stations (from 84 to 68) and 40% of fungible
stations (from 296 to 176).
During the year, in Portugal, Business Continuity Maintenance Program was fully fulfilled, with the update
of the Business Impact Analysis (BIA) and the Business Impact Analysis Plans (technical teams operational
manuals). Operational Continuity tests were also performed for critical activities, allowing the testing of
alternative procedures defined by the Bank, in order to ensure alternatives in the recovery of critical
processes. The definition and implementation of new alternative procedures will be a front to consider is
also during the year 2023, for the management of business continuity.
In Poland, the hybrid work model has also been fully integrated into business continuity plans, with
managers maintaining their teams' remote working hours to ensure support for critical processes in the
event of unavailability of the head office facilities. Additionally, a detailed analysis of the needs of
alternative installations was revisited due to the new reality of remote work and backup facilities in
Gdansk were closed, after some changes in processes (making them totally remote) and the transfer of
some activities to other alternative locations. Similar analyses have been developed for Warsaw, resulting
in savings related to backup facilities for business continuity. Testing conducted in October and December
2022 confirmed the good functionality of the new business continuity design regard to remote work and
local backup facilities.
Due to the war in Ukraine, a Crisis Committee (CC) was established on 24 February 2022 to monitor the
situation and potential risks of the Crisis Committee on Bank Millennium. Since then, CC meetings have
been held regularly. The main risk identified is the electricity supply blackout or brownout. This risk had
been identified in December 2021 and its mitigation work became a priority after the start of the war. A
detailed gap analysis was carried out, resulting in the planning of specific procedures for each group of
employees (IT and security, administration, support for corporate customers, retail branches, first-line
directors and administrators) and mitigation actions related to the backup of mobile communications for
critical employees and the strengthening of the capacity of the internal energy system (including the fuel
supply contract in case of energy crisis).
In Mozambique, business continuity management activities have registered a return to normality, once
the restrictions imposed by health entities under the COVID-19 pandemic have been fully lifted. In this
context, the rooms were resumed in alternative spaces, being maintained regular activity in some of
these spaces dedicated to the recovery of business by 3 units to support operational processes with
recovery time objectives (RTO) reduced and users of technological tools that require extended
installation and configuration times.
On the other hand, as in Portugal and Poland, remote work was established and integrated within the
scope of the Business Continuity Management Policy and Methodology - as an integral part of the recovery
strategy in the face of facilities unavailability scenarios - and 21 business recovery exercises were carried
out with the areas involved in critical Bank processes, there has been no situation where the assessment
has been below normal.

2022 REPORT & ACCOUNTS |

|155
Insurance contracting
The contracting of insurance for risks related to assets, persons or third-party liability is another
important instrument in the management of operational risk, where the objective is the transfer - total
or partial - of risks.
The proposals for the contracting of new insurance are submitted by the process owners under their
respective duties for the management of the operational risk inherent to their processes, or are
presented by the head of area or organic unit, and then analysed by the Compliance and Operational
Risks Commission and approved by the EC.
Legal, Compliance, Conduct and Financial Crime risks
Banco Comercial Português´s activity is governed by operating principles and rules that ensure a good
conduct, following the best international practices and adopting the appropriate measures in terms of
preventing compliance and conduct risks. With the purpose of permanently adapt its internal practices to
the best market practices, to the evolution of Banking activity, and to society as a whole, the Bank
regularly reviews its internal regulations and procedures to safeguard that the conduct of its Employees is
always guided by highest ethical principles, of satisfaction and protection of the interests of the client
and the Bank, in the pursuit of sustainable profitability. The Compliance Office strengthened the
monitoring of the Bank’s activity and internal conduct, by implementing a system for monitoring
potential situations of conflicts of interest, covering various aspects of this issue such as operations with
related parties, credit operations, development of extra-professional activities and the receipt of gifts by
Employees.
To comply with the relevant legal and regulatory norms related with Anti Money Laundering and Counter
Terrorism Financing (AML/CFT), as well as to safeguard the compliance with best international practices
on this matter, the Bank has a set of policies, procedures and systems that ensure an effective control of
the financial crime risk prevention, also ensuring an operational model that allows the Bank to identify,
assess and mitigate the potential risks inherent to the activity of its Clients, non-Clients and business
relationships established with one or the other.
The impact and relevance of this risk in the Banking activity developed, compels the Bank to address this
risk in multiple dimensions and on a continuous basis, whether in the establishment of new business
relationships or in the continuous evaluation of an already established business relationship. Through a
risk-based approach (RBA) for the assessment and monitoring of its business relationships or occasional
transactions execution, the Bank complies with all the required duties enshrined in Law no. 83/2017, of
18 of August, like for example, due diligence, abstention, refusal or communication.
For an effective and efficient AML/CFT activity, the Bank defines a set of policies and procedures that
are supported by a wide range of information systems, of which it is worth highlighting:
•Business Relations monitoring and alerts system;
•Financial transactions monitoring system;
•Entity filtering system;
•New Business relationships validation system;
•External information platforms.
Pursuing the continuous improvement of the internal control processes, these risks’ management system
was enhanced along 2022, to enable the Bank to respond adequately to the demands of the future
Banking business with origin in market dynamics changes and regulation evolution. From the set of
initiatives, it is worth mentioning the following:
•The continued strengthening, training and specialization of the Compliance Office teams within the
scope of AML/CFT model, in its various dimensions.
•The main legislative and regulatory highlights focused on the conflict resulting from the invasion of
Ukraine by Russia, due to the continued establishment of sanctions and embargoes.
•As a result of the establishment of the referred sanctions and embargoes, development of enhanced
controls to identify transactions and risk entities, ensuring compliance with restrictive measures.
•The implementation of a new AML/CFT Client risk model, which includes a set of new risk factors, in
compliance with the latest regulatory requirements.

| 2022 REPORT & ACCOUNTS

156 |
•The implementation of a new technological platform and a process that promotes the updating of
Customers' information and supporting documentation in the Bank, in compliance with AML/CFT -
related regulations.
•The strengthening of controls over Correspondent Banks, ensuring a timely periodic review of their
AML/CFT practices and policies according to their risk, whose assessment began to include a set of
new risk factors, in compliance with recent regulatory changes.
•Updating, within the scope of Banco de Portugal Notice 3/2020, information on the matters provided
for in its Annex, in a format accessible to all employees, including matters on the Bank such as its
shareholder, organisational and governance structure, its internal control system, its key function
holders, the characterisation of its business, its Code of Conduct, among others.
•Alteration of the internal regulations for the approval of new products, to include the concept of
"Non-permitted Products": those that include characteristics that do not meet the Group's risk or
business strategies or legal/regulatory requirements and that, therefore, cannot be part of the
Group's offer.
•Update to the Group's Code of Conduct, noting the following changes: incorporation of the principles
and guidelines derived from the EBA Guidance on Internal Governance (EBA/GL/2021/05) and the
inclusion of an article specifically on the prevention of corruption, as required by Decree-Law 109-
E/2021 of 9 December.
•Implementation of the Training and Communication Plans on compliance matters for all the Bank's
Employees and commercial structures, with the most important aspects to be considered, both in
terms of the risk of financial crime and in terms of other compliance and regulatory risks.
Market risks
Market risks are the potential losses that might occur in a given portfolio as a result of changes in interest
or exchange rates and/or in the prices of the portfolio’s various financial instruments, taking into account
not just the correlations that exist between those instruments but also their volatility.
The following management areas are defined for each Group entity for the objectives of profitability
analysis and market risk measurement and control:
•Trading - Management of positions whose objective is the achievement of short-term gains, through
sale or revaluation. These positions are actively managed, tradable without restriction and may be
valued frequently and accurately. The positions in question include securities and derivatives of sales
activities;
•Funding - Management of institutional funding (wholesale funding) and money market positions;
•Investment - Management of all the positions in securities to be held to maturity (or for a longer
period) or positions which are not tradable on liquid markets;
•Commercial - Management of positions arising from commercial activity with Customers;
•Structural - Management of balance sheet items or operations which, due to their nature, are not
directly related to any of the management areas referred to above; and
•ALM - Assets and Liabilities Management.
The definition of these management areas enables effective management separation of the trading and
banking books, as well as for the correct allocation of each transaction to the most appropriate
management area, based on its context and strategy.
To guarantee that the risk levels incurred in the Group’s various portfolios conform to the specified levels
of risk tolerance, various market risks limits are established, at least yearly, and are applicable to all
portfolios of the risk management areas over which the risks are occurring. The Risk Office monitors
these limits daily (or intra-daily in the case of financial markets areas).
Stop loss limits are also defined for the financial markets’ areas, based on multiples of the risk limits
defined for those areas, aimed at limiting the maximum losses that might occur. When these limits are
reached, a review of the strategy and of the assumptions relative to the management of the positions in
question is mandatory.

2022 REPORT & ACCOUNTS |

|157
Trading Book market risks 20
The daily measurement of general market risk (relative to interest rate risk, exchange rate risk, equity
risk and price risk of credit default swaps) uses a VaR (value-at-risk) model, considering a time horizon of
10 business days and a significance level of 99%.
The Group also uses an integrated market risk measurement that allows for the monitoring of all risk
subtypes that are considered relevant. This measurement includes the assessment of the following types
of risk: general risk, specific risk, non-linear risk and commodity risk. Each risk subtype is measured
individually using an appropriate risk model and the integrated measurement is built from the
measurements of each subtype without considering any kind of diversification between the four subtypes
(worst-case scenario approach).
For non-linear risk, an internally developed methodology is applied, replicating the effect that the main
non-linear elements of options might have in P&L results of the different portfolios in which these are
included, similarly to what is considered by the VaR methodology, using the same time horizon and
significance level.
Specific and commodity risks are measured through standard methodologies defined in the applicable
regulations, with an appropriate change of the time horizon considered.
The table below presents the amounts at risk for the Trading Book, in December 31, 2021 and December
31, 2022, as measured by the methodologies referred to above:

|  |  | (Thousands of euros)
| 31 December 2022 | Max of global risk in the period | Min of global risk in the period | 31 December 2021
Generic Risk (VaR) | 1,322 | 6,586 | 1,049 | 1,533
Interest rate risk | 1,011 | 3,836 | 962 | 1,432
FX risk | 841 | 4,195 | 482 | 469
Equity risk | 585 | 36 | 589 | 274
Diversification effects | (1,114) | (1,481) | (984) | (642)
Specific Risk | 13 | 37 | 15 | 35
Non-linear Risk | 0 | 0 | 0 | 0
Commodities Risk | — | — | — | —
Global Risk | 1,335 | 6,624 | 1,063 | 1,568

Starting in the second quarter of 2022, the performance of international financial markets has been
characterized by growing concerns about the impact of inflationary pressure, rising increases in interest
rates, and increased volatility in a setting of more economic uncertainty.
VaR model monitoring and validation
In order to check the appropriateness of the internal VaR model for the assessment of the risks involved
in the positions held, several validations are conducted over time, of different scopes and frequency,
which include back testing, the estimation of the effects of diversification and the analysis of the
comprehensiveness of the risk factors.
The VaR model’s hypothetical back testing exercise for the Portugal’s Trading Book, during 2022, resulted
in seven negative excesses (and two positive) over the results predicted by the model in 259 days of
observation. Hence, in terms of the frequency of excesses verified, the back-testing results validate the
model as appropriate for measuring the risk at stake.

| 2022 REPORT & ACCOUNTS

158 |
20 Positions assigned to the Trading Management Area (not specifically included in the accounting trading book).
Trading Book Stress Tests
As a complement to the VaR assessment, the Group continuously tests a broad range of stress scenarios,
analysing the respective results with a view to identifying risk concentrations that have not been
captured by the VaR model.
The results of these tests on the Group's Trading Book, as at December 30, 2022, in terms of impacts over
this portfolio’s results, were the following:

|  | (Thousand EUR)
| Negative impact scenario | Impact
STANDARD SCENARIOS |  |
Parallel shift of the yield curve by +/- 100 bps | + 100 bps | -2,210
Change in the slope of the yield curve (for maturities from 2 to 10 years) up to +/- 25 bps | - 25 bps | -88
4 combinations of the previous 2 scenarios | + 100 bps & + 25 bps | -2,135
+ 100 bps & - 25 bps | -2,289
Variation in the main stock market indices by +/- 30% | +30% | -1,519
Variation in foreign exchange rates (against the euro) by +/- 10% for the main currencies and by +/- 25% for other currencies | +10%, +25% | -1,547
Variation in swap spreads by +/- 20 bps | -20 bps | -63
NON-STANDARD SCENARIOS |  |
Widening/narrowing of the bid-ask spread | Widening | -6,588
Significant vertices (1) | VaR w/o diversification | -3,120
VaR w/ diversification | -1,952
Historical scenarios (2) | 40739 | -1,831
40935 | -4,040

(1) Scenarios in which the more adverse variations of the last seven years, relative to the portfolio's five most significant risk factors for
VaR, are applied to the current portfolio.
(2) Scenarios in which past extreme markets variations are applied to the current portfolio; in this case, the significant dates refer to the
Eurozone Sovereign Debt crisis (from 2010 onward)
These results show that the exposure of the Group’s trading book to the different risk factors considered
remains relatively limited and that the main adverse scenarios to be taken into account refer to a general
increase in interest rates, either a parallel shift or accompanied by a change in the slope of the yield
curve. In what concerns the non-standard scenarios, the main loss case refers to the widening of the bid-
ask spread.
Interest rate risk in the Banking Book
The interest rate risk arising from the Banking Book operations is assessed by the Bank in two
complementary ways: the portfolio’s economic value method (EVE) and the financial margin sensitivity
method (NII), through a risk sensitivity analysis carried out every month, for the universe of operations
included in the consolidated balance sheet of the Group, broken down by the currency of exposure.
Variations of market interest rates influence the Group's net interest income and the economic value of
the Group, both in the short term – affecting the Bank’s NII – and in the medium/long term, affecting the
balance sheet economic value (EVE method).
The main risk factors arise from the repricing mismatch of the portfolio positions (gap risk) which may
cause direct or indirect financial losses in the Banking Book, due to changes in interest rates that have
different impacts over assets and liabilities’ classes, making the Bank vulnerable to variations of the yield
curve. In turn, the changes in interest rates may alter the behaviour profile of Clients, inducing pre-
payments/withdrawals in assets and liabilities, including the exercise of options’ rights incorporated in
the products’ design (behavioural and optional risk). Additionally, although with less impact, there is the
risk of unequal variations in different reference rates with the same repricing period (basis risk).
In order to identify the exposure of the Group's Banking book to these risks, the monitoring of the interest
rate risk takes into consideration the financial characteristics of each of the relevant contracts, with the
respective expected cash-flows (principal and interest, without the spread component but including cost

2022 REPORT & ACCOUNTS |

|159
components for liquidity, capital, operations and other) being projected according to the repricing dates,
thus calculating the impact on economic value resulting from alternative scenarios of change of market
interest rate curves. The impacts stemming from the Clients’ behaviour are also considered, in particular,
for the products for which this is especially relevant – namely, for products without defined term
(checking accounts, revolving credit) – as well as the impacts resulting from changes in contractual cash
flows (credits prepayments) and impacts of any potential prepayments on credits with defined maturity.
The result of this analysis for a +100 b.p. change in the level of the Euro interest rates (for all maturities,
i.e. assuming a parallel shift of the yield curve), in the Banking Book portfolio as at December 31, 2022
consists of a positive impact on the balance sheet’s economic value of around 47.5 million euros. On the
other hand, the impact of a generalized drop in Euro rates of -100 b.p., would be around -53 million
euros.
Complementing the previous approach, the Bank calculates monthly the impact on net interest margin
projected for the following 12 months, due to changes in market interest rates (NII method). For this
purpose, all assets, liabilities and off-balance products that generate interest are considered and the
calculation of interest cash flows is performed based on the repricing and amortization characteristics of
the products and on yield curves for 12 months. This exercise assumes a static balance for 12 months in
which, for each amortization, an exposure with the same features of original maturity and price is
generated. To capture the net interest margin sensitivity, several simulations are processed,
corresponding to 10 different scenarios of the market’s interest rates evolution.
Considering a variation in market interest rates combined with the scenario for the coefficients that
transmit the market variations over the deposit´s rates and other interest-generating liabilities ('betas'),
the evolution of the sensitivity of the net interest margin is assessed. Hence, for a variation in interest
rates of +100 b.p. on December 31, 2022, on a consolidated basis, the net interest income would increase
by around 168.2 million euros, with the sensitivity to a decrease of 100 b.p. of about -168 million euros.
The presented values are indicative and very dependent on the pace of transmission of the interest rate
increase to balance sheet items whose price is not directly indexed to a market benchmark.
FX and equity risks of the Banking Book
The structural foreign exchange exposures, namely those resulting from financial holdings in subsidiaries,
are not included in this transfer and are hedged through market operations, taking into consideration the
defined strategy for managing structural foreign exchange risk, whose objective is to hedge against the
volatility in the CET1 ratio that stems from changes in foreign currency exchange rates
As of December 31, 2022, the Group’s financial participations in foreign currency were not hedged.
On 24 March 2023, the Group has been formally granted permission to exclude these positions of a
structural nature, deliberately taken or maintained by the Group to hedge against the adverse effect of
exchange rates on the capital ratio, from the calculation of the net open currency positions used for
calculating the capital requirement for foreign exchange risk.
Excluding the financial holdings from the participations in the foreign subsidiaries, the exposure to FX risk
is quite limited, corresponding to 0.1 million euros in terms of VaR, as of December 31, 2022.
Regarding equity risk, the Group maintains a set of small size and low risk equity positions, essentially in
the investment portfolio. The management of these positions is carried out by a specific area of the
Group, with the respective risk being controlled on a daily basis, through the indicators and limits defined
for market risks’ control.

| 2022 REPORT & ACCOUNTS

160 |
Liquidity risk
Liquidity risk consists of the Group's potential inability to meet its financing repayment obligations
without incurring significant losses, either due to onerous financing conditions (funding risk) or by selling
assets at lower than market values (risk of market liquidity).
The Consolidated Liquidity Plan, which forms an integral part of the annual budgeting process and is
formulated at the level of the Group and for the main subsidiaries, includes the projection of the wholesale
funding structure, including the use of market financing, and also the forecast of the internal and
regulatory liquidity indicators, ensuring its compliance with the regulatory and internally defined
requirements. The preparation of this plan is coordinated by the Group Treasurer, and its execution is
continuously monitored throughout the year, with the respective revision being carried out whenever
necessary.
In 2022, the liquidity positions of BCP, Bank Millennium and BIM reinforced their robustness, based mainly
on the growth of the respective customer deposit bases. This growth was particularly significant in the
operation in Portugal, in which it reached approximately 10%, mainly through the contribution of the retail
depositors’ segment. The main source of financing for the operation in Portugal thus saw its stability
reinforced, supporting, as in previous years, a favorable evolution of the commercial gap.
As a result, the liquidity risk indicators of each of the operations continued to comply by a very
comfortable margin with all the regulatory minimums and the stricter requirements imposed by the Group's
risk appetite framework.
Accordingly, the regulatory Liquidity Coverage Ratio (LCR), an indicator of short-term liquidity risk, stood
at 212% on a consolidated basis at the end of December 2022, well above the minimum regulatory
requirement of 100%, supported by portfolios of highly liquid assets whose value is compatible with a
prudent liquidity management by the Group.
The regulatory Net Stable Funding Ratio (NSFR), an indicator of structural liquidity risk, increased from
150% on 31 December 2021 to 154% on 31 December 2022, also above the regulatory minimum of 100%,
mainly based on the growth of the customer deposit portfolio.
The loan-to-deposit transformation ratio, another structural indicator of the RAS (calculated in accordance
with Banco de Portugal Instruction no 16/2004, in force), also evolved favorably from a liquidity risk
perspective, from 81% on 31 December 2022 to 74% one year later.
It should be noted that, in the annual risk review for 2023, the internal limits for the RAS indicators
remained unchanged facing 2022.
Regarding the presence of the Bank in the debt segment of the capital market, it is worth highlighting the
following events, in chronological order: (i) in May, BCP repaid a covered bond issue in the amount of 1,000
million euros; (ii) in October, the Bank placed an issue of senior preferred debt on the market in a 3NC2
format (3 years maturity callable after 2 years) in the amount of 350 million euros. The operation was
aimed at ensuring compliance with the requirements of “MREL” (Minimum Requirements for Own Funds and
Eligible Liabilities), namely the indicative target that will be in force during from 1 January 2023. This
issue, with a coupon of 8.50% per annum (corresponding to a spread of 554.7bps over mid-swaps) was
carried out in demanding market conditions, demonstrating the Bank's ability to access the market and (iii)
in November and following the decision not to exercise the option of early repayment on a T2 issue of 300
million euros, BCP launched an offer to exchange these unrepaid securities (in a ratio of 1:1), for others of
the same nature. Thus, investors were offered the option to exchange the bonds they held for newly with a
longer term. The amount of the new issue 10.25NC5.25 of T2 was set at 133.7 million euros and the coupon
at 8.75%, per annum, corresponding to a spread of 605.1bps over mid-swaps.
Still with regard to the funding structure, BCP repaid in advance in December 2022 the first tranche of the
Targeted longer term refinancing operation III (“TLTRO III”), contracted in June 2020 in the amount of 7.55
billion euros (with the second tranche, amounting to 600 million euros, already repaid in January 2023).
Considering the balance in deposit at the Banco de Portugal and other available liquidity, BCP ended 2022
with a long position on the Eurosystem of 2.6 billion euros.
The evolution described above is reflected in the table below, which represents the evolution of the
wholesale funding (net) in 31 December 2021 and 31 December 2022, in terms of each of the instruments
used:

2022 REPORT & ACCOUNTS |

|161
(Millions euros)

| Dec. 22 | Dec. 21 | Variation
Interbank monetary market (Net) | -157 | 218 | -172.1%
ECB (Net) | -2574 | 1730 | -248.8%
Loan agreements | 377 | 456 | -17.3%
EMTN | 1350 | 1000 | 35.0%
Covered Bonds | 0 | 1000 | -100.0%
Subordinated Debt | 1777 | 1784 | -0.4%
Total | 773 | 6187 | -87.5%

Throughout 2022, the behaviour of the liquidity buffer at the ECB was mainly determined by the impacts,
of the aforementioned favorable evolution of the commercial gap, on the one hand and, on the other
hand, of the growth of the margin calls related to derivatives and the decrease of the market price of the
assets eligible for discount with the Eurosystem, effects that showed a growing trend after the outbreak
of war in Ukraine. The combined effect of these and other factors of lesser materiality allowed,
nevertheless, the buffer to grow 2.7 billion euros on an annual basis, to 26.5 billion euros.
ECB liquidity buffer
(Billion Euros)
Likewise, in the year ended December 2022, Bank Millennium and BIM demonstrated the resilience of
their liquidity positions, supported by their retail deposit bases and robust buffers discountable at the
respective central banks, with regulatory and internal indicators of liquidity risk positioned comfortably
above the required thresholds. In the case of the operation in Poland, this occurred even considering the
effects of the invasion of Ukraine, which resulted in the significant devaluation of the eligible asset
portfolio and the strengthening of derivatives’ margin accounts.
In consolidated terms, the refinancing risk of medium and long-term instruments will remain at low levels
over the next three years, with annual values with no material expression.
The conclusions of the ILAAP process reiterate the adequacy of the liquidity and is low risk management
process, as well as the compliance of its practices with the requirements defined by the supervision.

| 2022 REPORT & ACCOUNTS

162 |
Pension Fund risk
This risk arises from the potential devaluation of the assets of the Fund associated with the Defined
Benefit Plan or from the reduction of its expected returns as well as from actuarial differences that may
occur from the evolution of demographical factors, in relation to the actuarial assumptions considered.
Confronted with such scenarios, the Group may have to make unplanned contributions in order to
maintain the benefits defined by the Fund. The responsibility for the regular monitoring of this risk and
the follow-up of its management lie with the Pension Funds Risk Monitoring Commission.
In 2022 the BCP Group Pension Fund had a net performance in commissions of -5,07%.
This performance is explained by the negative contribution recorded in some asset classes except
alternative investments, real estate investments and national actions that contributed positively to
performance.
The share stock portfolio contributed negatively to profitability and recorded sharp devaluations in both
the European and the International share stock components.The portuguese stocks component performed
positively.
In 2022, with the general increase in interest rates (around 275 bps in the 10 years in Germany since the
beginning of the year), the bond component contributed negatively to the fund's performance.
At the level of allocation in stocks and bonds the fund maintained a close allocation of neutrality against its
benchmark throughout the year. As the end of the year approaches, and after the significant rise in
interest rates, a reduction in the duration of the fixed rate component and exposure to stocks was
implemented, thereby reducing the Fund's overall sensitivity to market volatility.
The evolution of market interest rates in 2022 led to update the discount rate to clear the Fund's
liabilities. Thus, the discount rate in force at December 31, 2021, from 1.35%, was changed to 3.30% on
June 30, 2022 and to 4.17% at December 31, 2022. At the same time, as a result of the current inflation
environment, the growth rate of pensions increased to 3.5% in 2023, 2% in 2024 and 0.75% from 2025 and
the base wage growth rate moved to 3.75% in 2023, 2.25% in 2024 and 1% from 2025.
As at 31 December 2022, the pension fund's liabilities coverage was over €593 million, corresponding to
21.3% of total liabilities.
Integration of ESG Factors in Risk Management
In its risk classification, Millennium BCP recognises the ESG category which includes factors associated
with the climate and environmental components, and also with social and governance aspects.
These factors are not considered separately; in fact, they are seen as elements likely to affect positively
or negatively the financial performance and solvency of the Bank's customer’s and counterparties. This
way, the materialisation of their impacts occurs by means of the risk categories: credit, market,
operational & reputation, liquidity and financing.
Within this context, and with the purpose of promoting the integration of ESG factors in risk
management, the Bank implemented a set of processes and methodologies to identify, assess, manage
and monitor the impact of the ESG risk factors in overall risk, in accordance with the framework and
policies already established for the remaining financial and non-financial risks.
Governance Model
The governance model for risks arising from ESG factors follows a structure based on three lines of
defence which, under the leadership of the Board of Directors (and respective delegations on the
Executive Committee), ensure its adequate assessment and management.
The first-line functions comprise all the departments and business areas that interact with the Bank’s
customers, counterparties and suppliers, collect the information and data that support the assessment of
their risk profiles (and of their respective operations) and structure the commercial solutions with
characteristics associated with the ESG or with the promotion of control of their impacts on the Bank's
risk profile.

2022 REPORT & ACCOUNTS |

|163
The Sustainability Function lies within the first-line of defence and its responsibilities include a) the
overall management of the sustainability strategy and plans of Millennium BCP and of its financial group;
b) the direct orientation and operational support to the first and second lines of defence in the
performance of their main responsibilities; c) the development of policies, methodologies and reports
that address ESG issues; and d) the management of commitments and external communications by the
Bank and the Group in this area.
In the second line of defence, the responsibility for risk control, is assumed by the Risk Office and by the
Compliance Office. These functions ensure the procedures for the design, implementation of the policies/
methodologies/ risk management models, which are paramount in keeping the risk profile of the Group in
appropriate levels.
Among other, these responsibilities, include:
•Integrate the ESG dimension in risk appetite (Risk Appetite Framework - RAF);
•Develop and maintain the methodologies necessary for risk assessment and management;
•Carry out stress tests focused on climate and environmental risk factors;
•Introduce the ESG dimension in capital and liquidity adequacy exercises;
Specifically in terms of compliance, we emphasise the following controls:
•Compliance with regulations relating to sustainability and risk management arising from ESG factors;
•Quality in the external reporting and disclosure of information;
•Design and labelling of the commercial and investment products;
•Incorporation of ESG related requirements and conditions in the Bank’s contracts;
•Prevention of conflicts of interest in the provision of services and products related with ESG.
The third line of defence assumes responsibility for the independent review of all ESG aspects through
the annual work plans of the Internal Audit Function.
Identification of ESG risks
Climate changes and environmental degradation factors are elements that can potentially affect
economic activity. These alterations may include factors related to climate change (mitigation, and
adaptation), sustainable use and protection of hybrid and marine resources, transition towards a circular
economy, prevention and control of pollution, protection and restoration of biodiversity.
The materialisation of these risks fundamentally stems from the exposure banking´s portfolio to
customers, counterparties and invested assets whose performance may be affected or contribute to the
negative impacts of climate change and other environmental factors.
These factors may generate negative financial impacts which are identified and assessed by means of two
main dimensions:
•Physical risks factors: arising from the effects of climate change and environmental degradation. They
should be categorized as a) severe risks, if they arise from extreme weather events such as fires,
floods or droughts; b) chronic risks, if they arise from progressive changes in weather and climate
patterns or from a gradual loss of natural ecosystems;
•Transition risks factors: are the risks of any negative financial impact arising from the effort, in
progress or to happen in the future, of transition into a low-carbon and environmentally sustainable
economy. These may result, for example, from technological changes, the impact of public policies or
behavioural changes in terms of demand for goods or services (including banking services).
The materialisation of social risks factors is also assessed, considering the issues related with rights, well-
being and interests of persons and communities and include factors such as (in)equality, health, diversity,
inclusion, labour relations, workplace health and safety, human capital and communities.
In addition, the governance risk factors are also identified, through issues relating to leadership,
management and prevention of conflicts of interest, quality of internal control and independent reviews,
transparency and good practices, for example.

| 2022 REPORT & ACCOUNTS

164 |
A methodology for assessing the materiality of ESG risks was developed in order to determine the
potential impact of those risks on the Bank’s profile.
Management and monitoring principles
The management of the impact of the ESG risk factors must be appreciated in varying timeframes. In
contrast, the materialization of ESG risks is expected to occur over extended timeframes, which is why
the establishment of strategy and risk appetite follows different timeframes. For example, if the
assessment of physical (severe) risks can determine an action strategy more focused on the short term
(e.g., considering the establishment of additional mitigation measures, at the level of policies for
granting credit and insurance policy), the transition risks justify a more structural approach, based on
collecting information, evaluating customers and monitoring their performance over time.
From this perspective, management of ESG impacts follows the following principles:
•Establishment of a responsible corporate financing policy, which excludes or conditions the Group's
operations in sectors and/or activities with greater environmental and social impact;
•Integration of the strategy for managing risks arising from ESG factors into the Bank's global
sustainability plan, which steers the integration of the ESG dimension into business processes,
establishing goals, timelines and a model for controlling proper observance;
•Transparent communication. The Bank publicly discloses its sustainability and ESG impact
management goals and key practices, allowing all stakeholders to evaluate the robustness of its
approach, including its exposure to ESG risks;
•Regular monitoring of exposure to risks arising from ESG factors through the management information
routines already established for each of the risk categories;
•Internal standardisation of ESG references, through a corporate taxonomy that allows the
identification and classification of the exposures that are proven to have characteristics that promote
the transition of the Portuguese and European economy;
•Focus on credit risk management, through models that promote the integration of the ESG dimension
in the risk assessment of the Bank's companies/customers, ensuring that business decisions include an
assessment of the main impacts of ESG factors;
•Information gathering and structuring, using public sources and information provided directly by
customers, as a means of improving knowledge of customers' environmental performance and the
possible financial impacts associated with any limitation on this performance.
The implementation of these principles, in turn, is promoted through an internal policy of management of
the risks arising from ESG factors, which establishes the following main risk tools:
•Regular assessment of the materiality of the risks incorporating ESG factors to confirm alignment with
risk appetite and the need to implement mitigation actions;
•Risk assessment methodologies arising from ESG factors integrated in the credit risk assessment
models;
•Risk classification methodologies at portfolio level, enabling the identification of sectors, companies
and exposures more susceptible to transition and/or physical risks;
•Quantification models for financed GHG emissions, promoting strategic discussion regarding the
management of these emissions and their alignment (in time) with the Paris Agreement targets;
•Sensitivity analyses and stress tests focusing on climate risks.
Stress testing with a focus on climate risk
The Bank uses methodologies for analysing sensitivity and conducting stress tests to the risks arising from
ESG factors (with a focus on the climate risk component).
Considering the ESG risk materialisation horizons, this is an important risk management technique, which
allows assessing the potential impacts of climate change (and respective scenarios) on the financial
variables that affect the value of BCP's banking portfolio.
Based on its results, risk exposures may be identified that require the Bank to take additional
management measures to mitigate the potential impacts of climate risks.

2022 REPORT & ACCOUNTS |

|165
This function is ensured by the bank's Risk Office.
Models validation and monitoring
This function is ensured by the Models Monitoring and Validation Office (GAVM), reporting to the Chief
Risk Officer.
GAVM acts as the second line of defence, within the scope of the model risk management framework,
functionally independent from the areas that are responsible for the models (model owners and
developers) and from the Internal Audit Division. Hence, an adequate functions’ segregation is assured.
Its mission consists in monitor and validate risk quantification methodologies and internal models used in
BCP and other Group entities in Portugal, as well as to independently ensure the assessment of the
quality and adequacy of the risk management framework in what concerns internal models, metrics and
completeness of the associated data, according to the Model Risk Management (MRM) framework.
GAVM scope of action encompasses, inter alia, the validation of the methodologies and internal models
for credit risk (including Probability of Default (PD), Loss Given Default (LGD), Credit Conversion Factors
(CCF) and Expected Credit Loss (ECL) models, under the IFRS scope), market risk (in the trading book),
interest rate risk in the banking book (IRRBB) and for the risks included in the ICAAP, as well as the
regular monitoring of their performance and evolution. The results of the monitoring and validation
exercises are reported to the Models Monitoring and Validation Sub-Commission and to the Risk
Commission. Additionally, GAVM participates occasionally, depending on the agenda, in the Risk
Assessment Committee (CAvR) to report the unit’s activity.
Besides the activities directly related with the monitoring and validation of models, in terms of their
performance and quality, GAVM is responsible for the coordination of the model risk management (MRM)
activities, including the maintenance of a complete repository of the internal risk models used by the
Bank and its permanent monitoring and updating through the use of a model management and risk
assessment tool implemented at the Bank to support the MRM framework.
In 2022, several actions were carried out to monitor and validate the internal models in use by the Bank,
including the regulatory report of the templates including the validation results of the credit risk internal
models, according to the ECB instructions “Instructions for reporting the validation results of internal
models”. These actions aim, inter alia, to reinforce the confidence in the models, to monitor their
performance and evolution, verifying their business adequacy and their compliance with the applicable
regulatory requirements and best practices, as well as to reinforce the identification and adaptability to
changes in their predictive quality.
Within the scope of models’ validation, a highlight is made to the accompaniment of the inspections in
the scope of the applications for material changes in internal credit risk models (PD models applicable to
the Retail, Corporate and Real Estate segments, and LGD models applicable to Retail and Corporate
segments), the annual subsequent validations to credit risk models (PD, LGD and CCF), to market risks
and validation activities within the scope of the ICAAP risk’s quantification. Validations were performed
to the implementation of the European Banking Authority (EBA) guidelines into the credit pricing model
and to the Early Warning Signals (EWS) model applicable to the retail segments, as well as to the financial
collateral haircut estimation methodology and collective impairment model (ECL). Additionally, under the
scope of the interest rate risk in the banking book (IRRBB), the validation to the behavioural models and
to the quantification methodologies through Net Interest Income (NII) and Economic Value of Equity (EVE)
was also performed.
GAVM has the responsibility to maintain a robust and documented validation process for internal risk
methodologies and models, in line with current regulations. For this, it develops and applies validation
procedures and methodologies capable of ensuring proper model assessments and the alignment with the
applicable regulatory requirements, by reinforcing (i) the scope of validation exercises, (ii) the depth of
analysis and (iii) the transparency and auditability of the work performed.
As part of the model’s monitoring activities, GAVM also ensured, among others, the quarterly report to
the Risk Commission regarding the performance and quality of the internal models used under the IRB and
IMA approaches for, respectively, credit and market risk, the annual Model Risk Assessment (MRA)
exercise applicable to all current IRB, IMA and IRRBB models, as well as the reporting of the 20212
regulatory Credit Risk Benchmarking exercise promoted by EBA.

| 2022 REPORT & ACCOUNTS

166 |
Recovery Plan
Complying with the applicable law - Directive 2014/59/EU and its transposition to the Regime Geral das
Instituições de Crédito e Sociedades Financeiras (RGICSF) through Decree-Law 23-A/2015, from the 26th
of March – the Group annually revises the Recovery Plan for its business and activities, in which a set of
recovery options that could be implemented in a timely manner to respond to financial stress
circumstances that may be originated by events of both idiosyncratic and/ or systemic order is identified.
Considering that the Recovery Plan aims to restore the financial viability of the Group, several scenarios
are defined, supported on hypothetical and forward-looking events, against which the impacts of
recovery options, the Recovery Plan feasibility and the overall recovery capacity are tested.
In order to monitor the performance of the Group’s business activity, a set of quantitative and qualitative
key indicators is presented in the Recovery Plan, in line with the guidelines defined by the European
Banking Authority (EBA). This set of indicators is permanently monitored, allowing for immediate
management action whenever there are deviations that exceed pre-defined thresholds (also defined in
the Plan), the report of which, to the Group’s management and Supervision Bodies, is mandatory.
The priorities, responsibilities and specific measures to be taken in a capital and/or liquidity contingency
situation are defined by the Recovery Plan, which complements the Early Warning Signals (EWS) system,
for the anticipation of the occurrence of possible crises, namely, of liquidity. Simultaneously, the
Recovery Plan contains a ‘playbook’, intended to provide key information for rapid decision-making in a
crisis.
The Recovery Plan includes components of Bank Millennium’s Recovery Plan (Poland) and information
from Millennium bim’s Recovery Plan (Mozambique). It is aligned with the definition of the business
continuity framework and its respective plans (see the Operation Risk section), the Communication Plan –
towards the market and stakeholders (in contingency situations) and the results from the capital and/or
liquidity adequacy assessment processes already mentioned (ICAAP e ILAAP).

2022 REPORT & ACCOUNTS |

|167
Ratings assigned to BCP
2022 was marked by political/military tensions
associated with the invasion of Ukraine by Russia,
by the increase in inflation worldwide, related to
disruptions in supply chains, in particular
commodities, and by increases in reference
interest rates by the main central banks.
Although Portugal recorded GDP growth in 2022
above the European Union average, GDP growth is
expected to slow down in 2023, but should remain
positive. Portugal's real GDP growth should
benefit from the EU's NextGeneration funds and a
resilient labour market. Higher interest rates
should help moderate the dynamism of the real
estate market.
In 2022, both asset quality and the cost of risk
showed a positive evolution in the Portuguese
banking sector. In the case of BCP, there was a
reduction, in Portugal, of 517 million of NPE, a
reduction of 265 million in foreclosed assets and a
reduction of 376 million in exposure to
restructuring funds. The cost of risk, although
higher than the Portuguese peers, remained close
to 50 basis points.
The profitability of Portuguese banks should
continue to improve in 2023. The rise in interest
rates should benefit the banking system, although
controlling the cost of deposits is crucial. Inflation
will continue to put pressure on operating costs.
However, Portuguese banks are expected to
remain efficient, with the system's cost-to-income
ratio below 50%.
Portuguese banks have improved their funding
profile over the past decade, with bank deposits
representing the large majority of their funding
structures. The loan-to-deposit ratio is expected
to remain below 80% in 2023.
Portuguese banks continue their digital
transformation, with a clientele that is still
traditional, but increasingly uses digital channels.
It should be highlighted, in a context of rising
public debt yields, the stability of public debt
sustainability, recognized through the Stable
Outlook by the four Rating Agencies covering the
Portuguese Republic. In 2022, there were three
upgrades of the Portuguese Republic rating, by
DBRS, Fitch Ratings and S&P Global Ratings.
BCP's performance during the year was
conditioned by provisioning to face the legal risk
associated with credit denominated in CHF in
Poland and by the Polish Government's
announcement of measures aimed at protecting
debtors in Poland, in a scenario of high inflation,
contraction of the GDP and large increase in
reference interest rates, with significant
implications for the profitability of Polish banks
and their capitalization levels.
In 2022, some rating agencies took rating actions
on BCP:
On September 29, 2022, Fitch Rating Agency
revised the Outlook for BCP's rating from stable to
positive, maintaining the long-term rating at BB.
The revision of the outlook reflects the organic
reduction in non-performing assets since the end
of 2019, as well as the lower uncertainty about
the provisioning related to mortgage loans
denominated in CHF of Bank Millennium.
On September 16, 2022, S&P Global Ratings
upgraded its long-term issuer credit rating by one
notch to ‘BB+’, keeping the Outlook stable.
On June 14, 2022, Moody’s Rating Agency, as part
of its regular revision, upgraded BCP's senior
unsecured debt ratings to Investment Grade, from
Ba1/Prime-2 to Baa3/Prime-2, driven by the
reduction in the stock of Non-performing assets
(NPA) and the improvement in capitalization
levels over the last years, the improvement in
domestic profitability, which offsets the impact of
provisions for legal risk in Poland, as well as the
BCP’s funding plan being executed to comply with
its Minimum Requirement for own funds and
Eligible Liabilities (MREL), including the Combined
Buffer Requirement (CBR), from January 2024.
Simultaneously, the rating agency affirmed the
bank's Baseline Credit Assessment (BCA) and
Adjusted BCA at ba2; the Banks’ deposit ratings at
Baa2/Prime-2; the junior senior debt rating at
(P)Ba2; the dated subordinated debt at (P)Ba3;
and its preference shares rating at B2(hyb).
On May 30, 2022, following a more positive vision
on the banks in the south of Europe, DBRS Rating
Agency revised the BCP's trend to Stable from
Negative.
Subsequent events:
On March 17, 2023, Fitch Ratings upgraded its
long-term deposits rating on BCP to ‘BBB-’ and
the long-term Issuer Default Rating to ‘BB+’, with
a stable Outlook.

| 2022 REPORT & ACCOUNTS

168 |

Moody’s |  |  | Standard & Poor's |
Baseline Credit Assessment | ba2 |  | Stand-alone credit profile(SACP) | bb+
Adjusted Baseline Credit Assessment | Ba2 |  |  |
Counterparty Risk Assessment LT/ ST | Baa2(cr)/ P-2(cr) |  | Resolution Counterparty Credit Rating LT/ ST | BBB/A-2
Counterparty Risk LT / ST | Baa2 / P-2 |  | Issuer Credit Rating LT/ ST | BB+/B
Deposits LT / ST | Baa2 / P-2 |  | Senior Debt | BB+
Senior Debt | Baa3 / P-2 |  | Senior Non Preferred | BB-
Senior Non Preferred | Ba2 |  | Outlook | Stable
Outlook deposits / senior | Stable |  |  |
Subordinated Debt - MTN | (P)Ba3 |  | Subordinated Debt | B+
Subordinated Debt | Ba3 |  | Additional Tier 1 | CCC+
Additional Tier 1 | B2(hyb) |  |  |
Other Short Term Debt | P(NP) |  |  |
Covered Bonds | Aa2 |  |  |
Rating Actions |  |  | Rating Actions |
On June 14, 2022, Moody’s Rating Agency, as part of its regular revision, upgraded BCP's senior unsecured debt ratings to Investment Grade, from Ba1/Prime-2 to Baa3/Prime-2 |  | On 16 September, 2022, S&P Global Ratings upgraded its long-term issuer credit rating by one notch to ‘BB+’, keeping the Outlook stable.
Fitch Ratings |  |  | DBRS |
Viability Rating | bb |  | Intrinsic Assessment(IA) | BBB(Iow)
Support | 5 |  | Critical obligations | BBB (high) / R-1 (low)
Support Floor | No Floor |  |  |
Deposits LT/ ST | BB+/B |  | Deposits LT/ST | BBB/R-2 (high)
Senior Debt LT/ST | BB/B |  | Senior Debt LT/ ST | BBB (low)/ R-2 (middle)
Senior Non Preferred | BB- |  | Senior Non Preferred | BB (high)
Outlook | Positive |  | Trend | Stable
Subordinated Debt Lower Tier 2 | B+ |  | Dated Subordinated Notes | BB
Additional Tier 1 | B- |  | Additional Tier 1 | B
Covered Bonds | BBB+ |  | Covered Bonds | A
Rating Actions |  |  | Rating Actions |
On September 29, 2022, Fitch Rating Agency revised the Outlook for BCP's rating from stable to positive, maintaining the long-term rating at BB. |  | On May 30, 2022, DBRS Rating Agency revised the trend to Stable from Negative.

2022 REPORT & ACCOUNTS |

|169
Capital

The estimated CET1 ratio as at 31 December 2022 stood at 12.6% phased-in and 12.5% fully implemented,
reflecting a change of +93 and +77 basis points, respectively, compared to the 11.7% both phased-in and fully
implemented ratios reported in the same period of 2021 and above the minimum ratios defined on the scope of
SREP (Supervisory Review and Evaluation Process) for the year 2022 (CET1 9.156%, T1 11.125% and Total
13.750%). The Bank requested to the supervisory authority the application of article 352 (2) of the CRR to
exclude certain structural exchange rate positions from the calculation of market risk-weighted assets, to
immunize regulatory ratios against changes in exchange rates. This change would have an estimated impact on
the CET1 ratio of around 50 basis points. Subsequently, in March 2023 the Bank received a favourable decision.
The evolution of capital ratios in the period continued to be significantly conditioned by the impacts on Bank
Millennium, related to the increase in provisions for legal risks associated with loans in foreign currency and with
the new regime of moratoriums on mortgage loans adopted in Poland. These effects were offset by the positive
performance of the recurrent activity in Portugal, as well as by the capital reinforcement measures adopted.

| SOLVABILITY RATIOS |  |  |  | (Euro million)
|  | 31 Dec. 22 | 31 Dec. 21 | 31 Dec. 21 | 31 Dec. 21
|  | PHASED-IN | FULLY IMPLEMENTED
| OWN FUNDS |  |  |  |
| Common Equity Tier 1 (CET1) | 5,442 | 5,373 | 5,382 | 5,375
| Tier 1 | 5,939 | 5,882 | 5,875 | 5,884
| TOTAL CAPITAL | 7,279 | 7,213 | 7,241 | 7,247
| RISK WEIGHTED ASSETS | 43,103 | 45,933 | 43,106 | 45,863
| CAPITAL RATIOS (*) |  |  |  |
| CET1 | 12.6% | 11.7% | 12.5% | 11.7%
| Tier 1 | 13.8% | 12.8% | 13.6% | 12.8%
| Total | 16.9% | 15.7% | 16.8% | 15.8%

(*) Includes the cumulative net income recorded in each period.

| 2022 REPORT & ACCOUNTS

170 |
Pension Fund

The liabilities assumed by the Group Banco Comercial Português with pensions on retirement and other
benefits are related with the payment to Employees of pensions on retirement, orphan benefits and
permanent disability pensions and widow.
As at 31 December 2022, the Group’s liabilities stood at 2,791 million euros, comparing to 3,498 million
euros at the end of previous year. The Pension Fund’s assets which are financing the above mentioned
liabilities reached 3,384 million euros by the end of 2022 (3,700 million euros as at 31 December 2021).
As at 31 December 2022 and 31 December 2021, the main asset categories in the Pension Fund’s
portfolio presented the following distribution:
STRUCTURE OF THE PENSION FUND’S ASSETS AS AT 31 DECEMBER 2022
(xx%) Proportion as at 31 December 2021
As at 31 December of 2022, the structure of the Pension Fund's asset portfolio shows, when compared
to the prior year, reductions in shares, exposure to participation units in investment funds and bonds
and other fixed income securities category, in contrast to the increases observed in loans and advances
to credit institutions and properties and real estate funds.

2022 REPORT & ACCOUNTS |

|171
The actuarial assumptions considered by the Group for calculating the liabilities with pension
obligations were based on market indicators, particularly long-term debt yield of Euro Zone issuers
considered to be at good risk, as well as the demographic characteristics of its employees. The main
actuarial assumptions used to determine the Pension Fund’s liabilities over the last three financial
years are shown below:

Assumptions | 31 December 22 | 31 December 21 | 31 December 20
Discount rate | 4.17% | 1.35% | 1.05%
Increase in future compensation levels (a) | 3,75% in 2023; 2,25% in 2024 and 1% following years | 0.75% | 0.75%
Rate of pensions increase (a) | 3,5% in 2023; 2% in 2024 and 0,75% following years | 0.50% | 0.50%
Projected rate of return on fund's assets | 4.17% | 1.35% | 1.05%
Mortality tables |  |  |
Men | TV 88/90 less 1 year | TV 88/90 | TV 88/90
Women (b) | TV 99/01 less 2 years | TV 88/90 less 3 years | TV 88/90 less 3 years
Disability rate | Non applicable | Non applicable | Non applicable
Turnover rate | Non applicable | Non applicable | Non applicable
Normal retirement age (c) | 66 years and 7 months | 66 years and 6 months | 66 years and 5 months
Total salary growth rate for Social Security purposes | 1.75% | 1.75% | 1.75%
Revaluation rate of wages / pensions of Social Security | 1.00% | 1.00% | 1.00%

(a) This rate refers to the growth for the years following the reporting year.
(b) The mortality table considered for women corresponds to TV 99/01 adjusted in less than 2 years (which implies
an increase in life expectancy compared to that which would be considered in relation to their effective age).
(c) Retirement age is variable. The normal retirement age increases one month for each civil year and cannot be
higher than the normal retirement age in force in the General Social Security Regime (RGSS). The normal retirement
age in the RGSS is variable and depends on the evolution of the average life expectancy at 65 years of age. For
2021, the retirement age is 66 years and 6 months, for 2022 it is 66 years and 7 months. For 2023, due to the
evolution of the average life expectancy at 65 years in Portugal and, consequently, the reduction of the normal
retirement age in RGSS, the estimate of the normal retirement age was reduced to 66 years and 4 months. For the
projection of life expectancy’s increment, an increase of one year in every 10 years was considered, with the
maximum retirement age being set at 67 years and 2 months.
The actuarial differences recorded at the end of the year 2022 were positive by 376 million euros,
before taxes (positive in 135 million euros, before taxes, as at 31 December 2021) and include 1,109
million euros of actuarial gains, as a consequence of the increase in the discount rate from 1.35% as at
31 December 2021 to 4.17% as at 31 December 2022, 279 million euros of actuarial losses following the
change of rate of pensions increase (3.5% in 2023; 2% in 2024 and 0.75% following years at the end of
2022), 64 million euros of actuarial losses related to the change of mortality tables and 72 million euros
of actuarial losses related to the change of other assumptions. The actuarial deviations recognised in
2022 also incorporate 259 million euros of negative financial deviations related to the pension fund’s
return, in particular referring to the gap between the expected income and the effective income of the
Pension Fund. Finally, negative deviations of 59 million euros were also recorded as a result of
differences between expected and actual liabilities.

| 2022 REPORT & ACCOUNTS

172 |
The main indicators of the Pension Fund over the last three financial years are as follows:

MAIN INDICATORS | 31 December 22 | 31 December 21 | 31 December 20
Liabilities with pensions | 2,791 | 3,498 | 3,658
Minimum level of liabilities to cover* | 2,757 | 3,445 | 3,596
Value of the Pension Fund | 3,384 | 3,700 | 3,751
Coverage rate | 121.3% | 105.8% | 102.5%
Coverage rate of the minimum level of liabilities* | 122.7% | 107.4% | 104.3%
Return on Pension Fund | (5.1%) | 1.9% | 5.8%
Actuarial (gains) and losses | -376 | -135 | 89

* According to the Bank of Portugal requirements (assuming the application of the minimum requirement to all
Group companies)
As of 31 December 2022, the Group’s responsibilities showed a 121.3% coverage level, being funded at
a higher level than the minimum set by Banco de Portugal.
In 2022, negotiations continued with all the unions subscribing to the Group's Collective Labour
Agreements, for the conclusion of the full review of the respective clauses, negotiations which are still
ongoing.
At the same time, negotiations took place with all the unions subscribed to the Group's Collective
Labour Agreements for the revision of the Salary Tables and other clauses of pecuniary expression
relative to the years of 2021 and 2022, having been agreed on 20 June and 1 July with all the unions
subscribed to the Group's Collective Labour Agreements, the update of the Salary Tables and the Bank's
Contributions to SAMS in 2021 by 0.50%, and the increase of 0.50% of other clauses of pecuniary
expression, such as lunch subsidy, diuturnities, among others. The agreed updates take effect on 1
January 2021, with the exception of compensation for subsistence and travel allowances, which will be
updated after the agreed updates are operational.
Regarding the revision of the Salary Tables and other clauses of pecuniary expression for 2022, it was
agreed on 20 June with the unions Mais Sindicato do Sector Financeiro, SBC – Sindicato Bancários do
Centro and SBN - Sindicato dos Trabalhadores do Sector Financeiro de Portugal, the update of Salary
Tables by 1.10% up to and including level 13, and 0.70% for level 14 and beyond. An increase of 1.10%
was agreed for the Bank's contributions to SAMS and other pecuniary expression clauses, and an
increase of 7.14% was agreed for the lunch subsidy, whose daily value was increased to Euros 10.50.
The agreed updates were effective on 1 January 2022, with exception of compensation for subsistence
and travel allowances, which were effective after the agreed updates became operational.
Regarding SNQTB – Sindicato Nacional dos Quadros e Técnicos Bancários, SIB – Sindicato Independente
da Banca, an agreement has not yet been reached on the proposal presented by the Group on 22 June,
the content of which corresponds to what was agreed with the other unions, hence the negotiations are
still ongoing. Although no agreement has yet been reached with these unions, all Bank employees
benefit from the same conditions.

2022 REPORT & ACCOUNTS |

|173
Information on trends
Framework
In 2022, GDP grew 6.7%, which represented an
acceleration compared to the growth of 5.5%
observed in the preceding year. The dynamism of
private consumption and of tourism exports was
crucial to boost economic activity and mitigate
the impact of the slowdown in investment.
In 2023, the Bank of Portugal predicts a
significant deceleration of the Portuguese
economy, hindered by the uncertainty regarding
external demand and the evolution of the
inflation rate, that is expected to rise 5.8%, after
reaching 8.1% in 2022.
The strong nominal growth of the Portuguese
economy contributed to a reduction of the
Portuguese public debt as a percentage of GDP,
from 125.4% to 113.8% of GDP in 2022.
The profitability of Portuguese banks should
continue to improve in 2023. The rise in interest
rates should benefit the banking system, although
controlling the cost of deposits is crucial. Inflation
will continue to put pressure on operating costs.
However, Portuguese banks are expected to
remain efficient, with the system's cost-to-income
ratio below 50%.
The cost of risk should maintain the normalization
trend, with no significant impact expected from
an eventual deterioration in the quality of assets
in 2023. Portuguese banks have solid lending
policies due to the Bank of Portugal's macro
prudential recommendations issued in 2018 .
Portuguese banks have improved their funding
profile over the past decade, with bank deposits
representing the large majority of their funding
structures. The loan-to-deposit ratio is expected
to remain below 80% in 2023.
The sector has improved its asset quality and
capitalization since 2016 and is now more
resilient.
Impact on the Group's activity
In 2023, BCP should continue the path of
convergence to achieve the objectives of its
Strategic Plan.
The Bank should improve its profitability,
benefiting from the environment of higher
interest rates in the geographies in which it
operates, and from strict control over the
evolution of operating costs. The cost of risk
should maintain the normalization trend, even in
a context of deceleration of the Portuguese
economy, given the level of almost full
employment.
BCP reinforced its liquidity position in 2022. On-
balance sheet customer funds grew by 8.5% to
77.2 billion euros, reflecting growth of 4.8 billion
euros (9.6%) in Portugal. And simultaneously, at
Group level, the Customer base increased by
5.5%, to 6.5 million, with emphasis on the 18%
increase in mobile Customers compared to 2021,
which represent 63% of total Customers Group
assets (52% in Portugal). As a result of the higher
interest rate environment, credit is growing
moderately. In 2023, the Bank should continue to
present a solid liquidity position.
The BCP Group has been pursuing a trend of
improving asset quality, particularly in Portugal,
with the NPE ratio standing below 4% at the end
of 2022, an objective set out in the Strategic
Plan. A significant deterioration in asset quality is
not expected even in a scenario of economic
slowdown.
In 2022, BCP managed to demonstrate its ability
to generate organic capital, with the CET1 ratio
reaching the strategic objective established for
2024. In 2023, the Bank does not anticipate any
adverse effect in terms of evolution of the capital
ratio, and should continue to generate capital
organically. In steady state, BCP should be able to
distribute dividends, according to a dividend
payout ratio in line with the benchmark for the
sector.

| 2022 REPORT & ACCOUNTS

174 |
Non-financial information

The BCP Group pursues dynamic strategies adapted to the new challenges imposed by the several interested
parties with which it establishes relations. The main objective of the adopted sustainability policies, which foster
a culture of Social Responsibility, has been to positively influence the organization's long-term value proposition,
in balance with the well-being of people, the company and the communities in which it operates. and with the
preservation of natural resources, the climate and the environment.
Within this context, it is possible to divide the Bank's intervention into three major areas of intervention:
•Environment – implementation of measures that foster a fair and inclusive transition into a zero-carbon
economic development model, including the incorporation of the environmental component in the Bank’s risk
models and in the offer of products and services;
•Social – involvement with both the external and the internal communities;
•Corporate Governance - integration of the principles of sustainability in the Bank’s decision-making processes.
Therefore, as an integral part of its business model, Millennium bcp takes on the commitment to create social
value by developing actions to - and with - the various stakeholder groups with the goal of directly and indirectly
contribute to the economic and social development of the countries in which it operates.
Throughout the Bank's Sustainability journey, several external commitments have been made, of which the
following stand out:
•Adherence to the 10 Principles of the United Nations Global Compact and recognition of the importance of the
Sustainable Development Goals (SDGs) and the United Nations 2030 Agenda;
•“Letter of Commitment for Sustainable Financing in Portugal”, an aspirational document produced within the
scope of the “Reflection Group for Sustainable Financing in Portugal” promoted by the Ministries of the
Environment, Finance and Economy, which seek to highlight the importance of integrating environmental risks,
social and governance in decision-making and risk management in the financial sector;
•“Commitment to Lisbon European Green Capital”, promoted by CML, which brings together more than 200
entities with a presence in the city, including companies, schools and institutions, in a commitment to climate
action and towards sustainability that fosters a collective dynamic that allows fulfilling the targets defined by
the Paris Agreement and accelerating the path towards carbon neutrality;
•“CEO's Guide to Human Rights”, an initiative of the World Business Council for Sustainable Development (WBCSD)
and the Business Council for Sustainable Development (BCSD Portugal). The Guide incorporates reference
policies and practices and aims to contribute to the implementation and promotion of human rights in
organizations and their value chains;
•“Statement from Business Leaders for Renewed Global Cooperation” of the United Nations Global Compact, an
international declaration that aims to demonstrate the commitment to ethical leadership, based on good
governance practices, materialized through values, strategy, policies, operations and relations of proximity and
involvement with all Stakeholders;
•“Women’s Empowerment Principles” from the United Nations Global Compact, an important international
platform for the promotion of gender equality that demonstrates our long-term vision and the will to integrate –
and promote – a collective dynamic based on cooperation and trust.
The orientation of the BCP Group's activities in these matters is reflected in Corporate Policies and Principles
applicable to the various areas of activity and business (available at https://ind.millenniumbcp.pt/pt/
Institucional/sustentabilidade/Pages/cod_internos.aspx) and is implemented in the Sustainability Master Plan
(SMP), through which we intend to respond to the expectations, ambitions and needs of the Bank's Stakeholders
and contribute to sustainable development.
The SDP 2022, a plan structured around dimensions selected to respond to the topics in the Bank's materiality
matrix and under which we successfully implemented a large number of initiatives and concrete actions, included
the following lines of action:

2022 REPORT & ACCOUNTS |

|175

Dimension | Line of action
Governance Model of Sustainability and Corporate Policies | To redefine the governance model of the Sustainability Areas to allow a multidisciplinary and transversal action throughout the organization, including, whenever justified, the international operations
To review and update the Group's corporate policies
Sustainability Master Plan 2023
Develop comprehensive internal policies, in accordance with the Target Operating Model
Brand and reputation management reputation | Reinforce the positioning of Millennium bcp in sustainability indices
Adhere to principles and commitments on sustainability
Strengthen the communication and dissemination of Microcredit
Service quality and customer satisfaction | Optimize satisfaction levels
Responsible supplier management | Formalize compliance with social and environmental requirements in the relationship with Suppliers
Compliance with requirements and improvement of reporting practices | Improve sustainability reporting, ensuring alignment with relevant requirements and benchmarks
Sustainable financing policies and regulation | Monitor development of the European Commission's Sustainable Finance Action Plan
Monitor business strategy aligned with climate and environmental risks
Awareness and information to clients about products and services | Integrate in the communication with customers aspects of sustainability of the proposed investments
Risk management | Ensure ESG risk management competencies
Ensure integration of environmental and social risks in the risk analysis process
Inclusive and sustainable product offering | Develop an offer of "ESG" products that promote the transition of the economy to a sustainable model
Talent attraction and retention | Supporting the adoption of healthy lifestyles
Strengthen the mechanisms for proximity between employees and top management
Promotion of work-family balance
Volunteering | Volunteer Program
Human rights | Analyze and communicate positioning on human rights risk management
Financial literacy | Financial literacy program
Investment in the community | Develop campaigns in partnership with NGOs in the field of sustainable development
Strengthen the Foundation's role as a vehicle for Social Action
Climate change, energy efficiency and alternative energy | Contribute to limiting global warming in line with the Paris Agreement
Environmental performance | Minimize environmental impact of operations

The implementation of the SDP has made it possible to improve the Bank's performance with regard to the main axes of
sustainability, in particular:

Economic / Governance | Social | Environmental
total number of customers 7.203 thousand vs. 6.812 thousand in 2021 % of payments to local suppliers 90,5% vs. 92,3% in 2021 Total number of digital customers 4.768 thousand vs. 4.247 thousand in 2021 | Total number of employees 15.747 vs. 16.020 in 2021 Training (Hours) 710.476 vs. 726.400 in 2021 Donations 2,3 vs. 2,7 millions in 2021 | 5.469 tCO2e emitted vs. 38.611 em 2021 62.196 MWh of electricity consumed vs. 45.884 in 2021 1.163 MWh of renewable energy produced by the Bank

In order to promote transparency in communication with our Stakeholders, assess the evolution of our performance and
communicate this assessment carried out by recognized entities, we respond to several specialized indices:

| 2022 REPORT & ACCOUNTS

176 |

Scope | Index | Performance in 2022 |  | Performance in 2021 | Performance in 2020
Group BCP | MSCI | A | = | A | A
Group BCP | DJSI | 62% | ↓ | 64% | 69%
Group BCP | Carbon Disclosure Project | B | = | B | A-
Group BCP | Bloomberg Gender-Equality Index | 85% | ↑ | 81% | 78%
Group BCP | Vigeo Eiris | 46% (88% disclosure) | ↓ | 49% (88% disclosure) | 47% (86% disclosure)
Group BCP | Gaïa Rating | 70% | ↑ | 66% | 61%
Group BCP | Refinitiv | 78% | ↑ | 76% | 77%
Group BCP | Sustainalytics | 22% | ↑ | 33% | 32%

In 2022, the BCP Group remained in 'The Sustainability Yearbook', a reference publication in the area of Sustainability
published by Standard & Poor's based on information collected in the responses given to the 'Dow Jones Sustainability
Indices' (DJSI).
In the new Strategic Plan Cycle – Excelling 24 -, Millennium bcp will continue to seek to explore business opportunities
related to sustainability, as well as manage the physical and transition risks of its portfolio to assert itself as a
reference in the market. Millennium will innovate in its own products with a green and social rating aimed at all
business segments.
Detailed information and indicators on the BCP Group’s Sustainability performance are available, in an aggregated view
and by geography, in the 2022 Sustainability Report, at https://ind.millenniumbcp.pt/pt/Institucional/
sustentabilidade/Pages/ annual_reports.aspx .

2022 REPORT & ACCOUNTS |

|177
Correspondence table between the Management Report and Decree-Law 89/2017

Decree-law no. 89/207 of July 28 | Chapter/Section | Page/s
Artº3º (Referred to No. 2 of Article 508-G of the CSC) The non-financial statement must contain enough information for an understanding of the evolution, performance, position and impact of its activities, referring, at a minimum, to environmental, social and worker-related issues, equality between women and men, the non- discrimination, respect for human rights, combating corruption and attempted bribery, including:
a) Brief description of the company's business model | SR 2022 | Creating Value | 10
SR 2022 | Introduction > Governance Model | 22-23
Report and Accounts 2022| Business Model | 39-42
b) Description of the policies followed by the company in relation to these matters, including the due diligence processes applied c) Results of these policies | ENVIRONMENTAL: |
SR 22 | Introduction > Commitments | 25-27
SR 22 | Introduction > ESG Risk Management | 30
SR 22 | V- Environmental Responsibility | 136-162
SR 22 | Table TCFD | 213
SOCIAL AND WORKER-RELATED: |
SR 22 | Introduction > ESG Risk Management | 30
SR 22 | Economic and Governance Responsibility > Employees | 49-65
SR 22 | Social Responsibility > Employee Benefits | 107-114
EQUALITY BETWEEN WOMEN AND MEN AND NON-DISCRIMINATION: |
SR 22 | Introduction > Commitments | 25-27
SR 22 | Economic and Social Responsibility and Governance > Employees | 49-65
HUMAN RIGHTS: |
SR 22 | Introduction > Commitments | 25-27
SR 22 | Social Responsibility > Human Rights | 115-117
FIGHTING CORRUPTION AND BRIBERY ATTEMPTS: |
SR 22 | Economic and Governance Accountability > Ethics and Professional Conduct | 66-74
d) Main risks associated with these issues, linked to the company's activities, including, where relevant and proportionate, its business relationships, its products or services likely to have negative impacts in these areas and the way in which those risks are managed by the company | ENVIRONMENTAL: |
SR 22 | Introduction > ESG Management | 30
SR 22 | TCFD | 159-162
SOCIAL AND WORKER-RELATED: |
SR 22 | Introduction > ESG Risk Management | 30
SR 22 | Economic and Governance Accountability > Employees | 49-65
EQUALITY BETWEEN WOMEN AND MEN AND NON-DISCRIMINATION: |
SR 22 | Economic and Governance Accountability > Employees | 49-65
HUMAN RIGHTS: |
SR 22 | Social Responsibility > Human Rights | 115-117
Tabela UNGP- Quadro de Relatórios dos Princípios Orientadores da ONU | 210-212
FIGHTING CORRUPTION AND BRIBERY ATTEMPTS: |
SR 22 | Introduction > ESG Risk Management | 30
SR 22 | Economic and Governance Accountability > Ethics and Professional Conduct | 66-74
e) Key performance indicators relevant to your specific activity | ENVIRONMENTAL: |
SR 22 | Environmental Responsibility | 135-162
SOCIAL AND WORKER-RELATED: |
SR 22 | Economic and Governance Accountability > Employees | 49-65
SR 22 | Social Responsibility > Employee Benefits | 107-114
EQUALITY BETWEEN WOMEN AND MEN AND NON-DISCRIMINATION: |
SR 22 | Economic and Governance Accountability > Employees | 49-65

| 2022 REPORT & ACCOUNTS

178 |
Consolidated financial statements

BANCO COMERCIAL PORTUGUÊS
CONSOLIDATED INCOME STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2022 AND 2021

| (Thousands of euros)
| 2022 | 2021
Interest and similar income | 2,737,235 | 1,709,124
Interest expense and similar charges | (587,463) | (120,523)
NET INTEREST INCOME | 2,149,772 | 1,588,601
Dividends from equity instruments | 10,086 | 938
Net fees and commissions income | 771,908 | 727,723
Gains/(losses) on financial operations at fair value through profit or loss | 27,306 | (247)
Foreign exchange gains/(losses) | 19,390 | 17,494
Gains/(losses) on hedge accounting | (2,233) | 4,286
Gains/(losses) arising from derecognition of financial assets and liabilities at amortised cost | 18,883 | (3,717)
Gains/(losses) arising from derecognition of financial assets at fair value through other comprehensive income | (13,386) | 68,722
Other operating income / (losses) | (193,112) | (128,905)
TOTAL OPERATING INCOME | 2,788,614 | 2,274,895
Staff costs | 580,807 | 654,270
Other administrative costs | 352,961 | 324,172
Amortisations and depreciations | 139,250 | 137,156
TOTAL OPERATING EXPENSES | 1,073,018 | 1,115,598
NET OPERATING INCOME BEFORE PROVISIONS AND IMPAIRMENTS | 1,715,596 | 1,159,297
Results on modification | (309,865) | —
Impairment of financial assets at amortised cost | (300,829) | (352,833)
Impairment of financial assets at fair value through other comprehensive income | 5,023 | (4,626)
Impairment of other assets | (192,059) | (60,882)
Other provisions | (568,297) | (642,726)
NET OPERATING INCOME | 349,569 | 98,230
Share of profit of associates under the equity method | 68,722 | 56,937
Gains / (losses) arising from sales of subsidiaries and other assets | 10,167 | 2,570
NET INCOME BEFORE INCOME TAXES | 428,458 | 157,737
Income taxes |  |
Current | (109,632) | (81,353)
Deferred | (194,688) | (122,273)
NET INCOME AFTER INCOME TAXES FROM CONTINUING OPERATIONS | 124,138 | (45,889)
Net income from discontinued or discontinuing operations | 5,537 | 70,881
NET INCOME AFTER INCOME TAXES | 129,675 | 24,992
Net income for the year attributable to: |  |
Bank's Shareholders | 207,497 | 138,082
Non-controlling interests | (77,822) | (113,090)
NET INCOME FOR THE YEAR | 129,675 | 24,992
Earnings per share (in Euros) |  |
Basic | 0.011 | 0.007
Diluted | 0.011 | 0.007

2022 REPORT & ACCOUNTS |

|179
BANCO COMERCIAL PORTUGUÊS
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2022 AND 2021

(Thousands of euros)
| 2022 | 2021
ASSETS |  |
Cash and deposits at Central Banks | 6,022,001 | 7,796,299
Loans and advances to credit institutions repayable on demand | 213,460 | 361,786
Financial assets at amortised cost |  |
Loans and advances to credit institutions | 963,434 | 453,213
Loans and advances to customers | 54,675,793 | 54,972,401
Debt securities | 13,035,582 | 8,205,196
Financial assets at fair value through profit or loss |  |
Financial assets held for trading | 766,597 | 931,485
Financial assets not held for trading mandatorily at fair value through profit or loss | 552,679 | 990,938
Financial assets at fair value through other comprehensive income | 7,461,553 | 12,890,988
Hedging derivatives | 59,703 | 109,059
Investments in associated companies | 298,717 | 462,338
Non-current assets held for sale | 499,035 | 780,514
Investment property | 15,217 | 2,870
Other tangible assets | 574,697 | 600,721
Goodwill and intangible assets | 182,687 | 256,213
Current tax assets | 17,945 | 17,283
Deferred tax assets | 2,938,986 | 2,688,216
Other assets | 1,582,455 | 1,385,292
TOTAL ASSETS | 89,860,541 | 92,904,812
LIABILITIES |  |
Financial liabilities at amortised cost |  |
Resources from credit institutions | 1,468,360 | 8,896,074
Resources from customers | 75,430,143 | 69,560,227
Non subordinated debt securities issued | 1,482,086 | 2,188,363
Subordinated debt | 1,333,056 | 1,394,780
Financial liabilities at fair value through profit or loss |  |
Financial liabilities held for trading | 241,506 | 231,241
Financial liabilities at fair value through profit or loss | 1,817,678 | 1,581,778
Provisions | 561,786 | 458,744
Current tax liabilities | 23,680 | 20,427
Deferred tax liabilities | 11,708 | 16,932
Other liabilities | 1,391,973 | 1,116,983
TOTAL LIABILITIES | 83,939,976 | 85,842,755
EQUITY |  |
Share capital | 3,000,000 | 4,725,000
Share premium | 16,471 | 16,471
Other equity instruments | 400,000 | 400,000
Legal and statutory reserves | 268,534 | 259,528
Reserves and retained earnings | 1,245,949 | 580,304
Net income for the year attributable to Bank's Shareholders | 207,497 | 138,082
TOTAL EQUITY ATTRIBUTABLE TO BANK'S SHAREHOLDERS | 5,138,451 | 6,119,385
Non-controlling interests | 782,114 | 942,672
TOTAL EQUITY | 5,920,565 | 7,062,057
TOTAL LIABILITIES AND EQUITY | 89,860,541 | 92,904,812

| 2022 REPORT & ACCOUNTS

180 |
Alternative performance measures

The BCP Group prepares financial information in accordance with International Financial Reporting Standards
(IFRS) endorsed by European Union. As a complement to that information, the BCP Group uses a set of
alternative performance measures that allow monitoring the evolution of its activity over the time. Following
the guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority
(ESMA) on October 2015 (ESMA/2015/1415), the BCP Group presents some indicators related to the
assessment of profitability and efficiency and the quality of the credit portfolio, among others, which are
intended to facilitate comprehension of the evolution of the economic and financial position of the Group.
The information presented in this context does not, under any circumstance, replace the financial
information prepared in accordance with IFRS. It should also be noted that the definitions and concepts used
by the BCP Group for the calculation of these indicators may differ from those used by other entities in the
determination of other similar measures and may therefore not be directly comparable. In accordance with
the aforementioned guidelines, in addition to the alternative performance measures, detailed below,
additional information is presented throughout this document, in the respective chapters, that reconciles the
accounting figures presented in the consolidated financial statements prepared in accordance with IFRS and
financial information reflecting the management criteria adopted by the BCP Group. These indicators and
their components are also described in more detail in the glossary.
1)Loans to customers (net) / Balance sheet customer funds
Relevance of the indicator: the loans-to-deposits ratio is an indicator of liquidity that allows the evaluation
of the Group's retail funding structure.

Million euros
| 31 December 22 | 31 December 21 | 31 December 20 restated
Loans to customers (net) (1) | 56,198 | 56,360 | 53,975
Balance sheet customer funds (2) | 77,250 | 71,175 | 64,764
(1) / (2) | 72.7% | 79.2% | 83.3%

2)Return on average assets (ROA)
Relevance of the indicator: allows measurement of the capacity of the Group to generate results with the
volume of available assets.

|  | Million euros
| 2022 | 2021 | 2020 restated
Net income (1) | 207 | 138 | 183
Non-controlling interests (2) | (78) | (113) | 25
Average total assets (3) | 95,944 | 90,484 | 84,829
[(1) + (2), annualised] / (3) | 0.1% | 0.0% | 0.2%

2022 REPORT & ACCOUNTS |

|181
3)Return on average equity (ROE)
Relevance of the indicator: allows assessment of the capacity of the Group to remunerate its shareholders,
assessing the level of profitability generated by the funds invested by the shareholders in the Group.

Million euros
| 2022 | 2021 | 2020 restated
Net income (1) | 207 | 138 | 183
Average equity (2) | 5,166 | 5,847 | 5,840
[(1), annualised] / (2) | 4.0% | 2.4% | 3.1%

4)Cost to income
Relevance of the indicator: it allows for the monitoring of the level of efficiency of the Group (excluding
specific items), evaluating the volume of operating costs to generate net operating revenues.

Million euros
| 2022 | 2021 | 2020 restated
Operating costs (1) | 1,073 | 1,116 | 1,090
of which: specific items (2) | 16 | 91 | 46
Net operating revenues (3)* | 2,868 | 2,334 | 2,257
[(1) - (2)] / (3) | 36.8% | 43.9% | 46.3%

* Excludes the specific items, related to costs with the acquisition, merger and integration of Euro Bank S.A., recognized in the Polish
subsidiary (an immaterial amount in 2020).
5)Cost of risk, net of recoveries (expressed in basis points, annualised)
Relevance of the indicator: allows assessment of the quality of the loan portfolio by evaluating the ratio
between impairment charges recognised in the period (net of reversals and recoveries of credit and interest)
and the stock of loans to customers at the end of that period.

|  |  | Million euros
| 2022 | 2021 | 2020 restated
Loans to customers at amortised cost, before impairment (1) | 57,684 | 58,137 | 55,668
Loan impairment charges (net of recoveries) (2) | 301 | 349 | 510
[(2), annualised] / (1) | 52 | 60 | 92

6)Non-performing exposures (NPE) / Loans to customers (gross)
Relevance of the indicator: allows the assessment of the level of credit risk to which the Group is exposed
based on the proportion of the NPE loan portfolio in the loans-to-customers portfolio (gross).

|  |  | Million euros
| 31 December 22 | 31 December 21 | 31 December 20 restated
Non-Performing Exposures (1) | 2,218 | 2,752 | 3,295
Loans to customers (gross) (2) | 57,713 | 58,231 | 56,048
(1) / (2) | 3.8% | 4.7% | 5.9%

| 2022 REPORT & ACCOUNTS

182 |
7)Coverage of non-performing exposures (NPE) by balance sheet impairment
Relevance of the indicator: it allows the assessment of the level of coverage of the NPE portfolio by balance
sheet impairment.

Million euros
| 31 December 22 | 31 December 21 | 31 December 20 restated
Non-Performing Exposures (1) | 2,218 | 2,752 | 3,295
Loans impairments (balance sheet) (2) | 1,515 | 1,871 | 2,073
(2) / (1) | 68.3% | 68.0% | 62.9%

2022 REPORT & ACCOUNTS |

|183
Application of Results

Taking into consideration:
A.The provisions of the law and of the articles of association concerning the legal reserve;
B.The dividends policy of Banco Comercial Português (BCP);
C.The alteration introduced in the Work Collective Agreement, published on 29 March 2014 on the no Bulletin of
Work and Employment nr. 12 which enabled the Employees of Group Banco Comercial Português in Portugal, in
the period of time comprised between June 2014 and June 2017, to accept a temporary reduction in their
remuneration. This reduction was done with the purpose of rendering the Bank’s recovery process feasible and
contribute for the compliance with the requirements imposed to the Bank to be able to benefit from State Aid;
D.That the said alteration to the Work Collective Agreement presumed that the Board of Directors, in the years
following the end of the State aid, if there were earnings for such, would present to the General Meeting of
Shareholders a proposal for the distribution of earnings to Employees that, at the end of the years, would
enable the delivery of an cumulative global amount, at least, equal to the total amount which the Employees
did not receive during the period while the temporary reduction in their remuneration was in effect;
E.That BCP completed the payment of the State aid, plus respective interests, in February 2017 and the General
Meetings of Shareholders held on 22 May 2019, on 20 May 2020 and on 4 May 2022 approved the allocation of a
portion of the earnings of the financial years to be distributed to the Employees, remaining an amount of
9,972,000.00 euros to complete the aforementioned cumulative global amount;
F.That, according to the financial statements to be submitted to the approval of the Shareholders, in the 2022
financial year Banco Comercial Português recorded consolidated net earnings amounting to €207,496,546.09
and individual net earnings amounting to 478,408,250.40 euros;
G.That the approval of any compensation for the Employees against the income statement, as well as the
estimation of the respective amount, pertains exclusively to the General Meeting of Shareholders,
H.That the Dividends Policy approved by this General Meeting of Shareholders on 20 May 2021 sets as its
Guidelines:
I.The promotion of conditions for the sustainable observance of the capital ratios at any moment
applicable to the Bank, as well as the remaining applicable legal requirements, including the
limitations that are applicable at any moment, resulting from the calculation of the maximum
amount to be distributed;
II.The retention of own funds that enable to promote coherence with the Risk Appetite Statement
(RAS) and with the results of the internal capital adequacy assessment process (ICAAP);
III.The safeguard of an appropriate safety margin on the values established by the regulator within the
scope of its assessment and evaluation on the adequacy of strategies, processes, capital and
liquidity that are appropriate to the risks to which the Bank is or might be exposed to (SREP);
I.That, although the measures taken to address the impacts related to the Polish subsidiary on the consolidated
financial position of the Bank, combined with the organic results, have allowed the prudential capital ratios to
improve compared to the previous year, the Board of Directors, in accordance with its dividend policy, should
consider the potential impacts and uncertainties associated with the current economic, financial and
geopolitical context, which warrant special prudence and the consolidation of solvency levels as a precondition
for the reestablishment of the desired distribution of profits in line with banking sector best practices,

| 2022 REPORT & ACCOUNTS

184 |
The Board of Directors
Proposes:
I
In accordance with article 66 (5) (f) and for purposes of article 376 (1) (b) of the Companies Code, and article 55
of the Bank’s articles of association, we propose the following application of year-end results amounting to
478,408,250.40, euros:
a) For the reinforcement of legal reserve, 47,840,825.04 euros;
b) For distribution to the employees 9,972,000.00 euros;
c) 420,595,425.36 euros, that is, the remaining, to Retained Earnings.
II
We do hereby propose that, pursuant to the approval regarding the distribution of the global amount of
9,972,000.00 euros foreseen in number one of paragraph b), it is resolved that the determination of the specific
amount to attribute to each employee be established by the Executive Committee and paid together with the
remuneration corresponding to June 2023.
THE BOARD OF DIRECTORS
Lisbon, 27 March 2023

2022 REPORT & ACCOUNTS |

|185
Glossary

Assets placed with customers – amounts held by customers in the context of the placement of third-party
products that contribute to the recognition of commissions.
Balance sheet customer funds – deposits and other resources from customers and debt securities placed
with customers.
Business Volumes - corresponds to the sum of total customer funds and loans to customers (gross).
Commercial gap – loans to customers (gross) minus on-balance sheet customer funds.
Core income - net interest income plus net fees and commissions income.
Core net income - net interest income plus net fees and commissions income deducted from operating costs.
Cost of risk, net (expressed in basis points) - ratio of loans impairment (P&L) accounted in the period to
loans to customers at amortised cost and debt instruments at amortised cost related to credit operations
before impairment at the end of the period.
Cost to core income - operating costs divided by core income.
Cost to income – operating costs divided by net operating revenues.
Coverage of non-performing exposures by impairments – loans impairments (balance sheet) divided by the
stock of NPE.
Coverage of non-performing loans by impairments – loans impairments (balance sheet) divided by the stock
of NPL.
Coverage of overdue loans by impairments - loans impairments (balance sheet) divided by overdue loans.
Coverage of overdue loans by more than 90 days by impairments - loans impairments (balance sheet)
divided by overdue loans by more than 90 days.
Debt instruments – non-subordinated debt instruments at amortised cost and financial liabilities measured at
fair value through profit or loss (debt securities and certificates).
Debt securities placed with customers - debt securities issued by the Bank and placed with customers.
Deposits and other resources from customers – resources from customers at amortised cost and customer
deposits at fair value through profit or loss.
Dividends from equity instruments - dividends received from investments classified as financial assets at
fair value through other comprehensive income, from financial assets held for trading and, until 2017, from
financial assets available for sale.
Equity accounted earnings - results appropriated by the Group related to the consolidation of entities
where, despite having some influence, the Group does not control the financial and operational policies.
Insurance products – includes unit linked saving products and retirement saving plans (“PPR”, “PPE” and
“PPR/E”).
Loans impairment (balance sheet) – balance sheet impairment related to loans to customers at amortised
cost, balance sheet impairment associated with debt instruments at amortised cost related to credit
operations and fair value adjustments related to loans to customers at fair value through profit or loss.
Loans impairment (P&L) – impairment (net of reversals and net of recoveries - principal and accrual) of
financial assets at amortised cost for loans to customers and for debt instruments related to credit
operations.
Loans to customers (gross) – loans to customers at amortised cost before impairment, debt instruments at
amortised cost associated to credit operations before impairment and loans to customers at fair value
through profit or loss before fair value adjustments.
Loans to customers (net) - loans to customers at amortised cost net of impairment, debt instruments at
amortised cost associated to credit operations net of impairment and balance sheet amount of loans to
customers at fair value through profit or loss.
Loan to Deposits ratio (LTD) – loans to customers (net) divided by deposits and other resources from
customers.

| 2022 REPORT & ACCOUNTS

186 |
Loan to value ratio (LTV) – mortgage amount divided by the appraised value of property.
Net commissions - net fees and commissions income.
Net interest margin (NIM) - net interest income for the period as a percentage of average interest earning
assets.
Net operating revenues - net interest income, dividends from equity instruments, net commissions, net
trading income, other net operating income and equity accounted earnings.
Net trading income – results from financial operations at fair value through profit or loss, results from
foreign exchange, results from hedge accounting operations, results from derecognition of financial assets
and financial liabilities measured at amortised cost, results from derecognition of financial assets measured
at fair value through other comprehensive and results from financial assets available for sale (until 2017).
Non-performing exposures (NPE) – non-performing loans and advances to customers (loans to customers at
amortised cost and loans to customers at fair value through profit or loss) more than 90 days past-due or
unlikely to be paid without collateral realisation, if they recognised as defaulted or impaired.
Non-performing loans (NPL) – overdue loans (loans to customers at amortised cost, debt instruments at
amortised cost associated to credit operations and loans to customers at fair value through profit or loss)
more than 90 days past due including the non-overdue remaining principal of loans, i.e. portion in arrears,
plus non-overdue remaining principal.
Off-balance sheet customer funds – assets under management, assets placed with customers and insurance
products (savings and investment) subscribed by customers.
Operating costs - staff costs, other administrative costs and depreciation.
Other impairment and provisions – impairment (net of reversals) for loans and advances of credit
institutions classified at amortised cost, impairment for financial assets (classified at fair value through other
comprehensive income, at amortised cost not associated with credit operations and available for sale, in the
latter case until 2017), impairment for other assets, namely assets received as payment in kind, investments
in associated companies and goodwill of subsidiaries and other provisions.
Other net income – dividends from equity instruments, net commissions, net trading income, other net
operating income and equity accounted earnings.
Other net operating income – net gains from insurance activity (only until 2019), other operating income/
(loss) and gains/(losses) arising from sales of subsidiaries and other assets.
Overdue loans – total outstanding amount of past due loans to customers (loans to customers at amortised
cost, debt instruments at amortised cost associated to credit operations and loans to customers at fair value
through profit or loss), including principal and interests.
Overdue loans by more than 90 days – total outstanding amount of past due loans to customers by more
than 90 days (loans to customers at amortised cost, debt instruments at amortised cost associated to credit
operations and loans to customers at fair value through profit or loss), including principal and interests.
Performing loans - loans to customers (gross) deducted from Non-performing exposures (NPE).
Resources from credit institutions – resources and other financing from Central Banks and resources from
other credit institutions.
Return on average assets (Instruction from the Bank of Portugal no. 16/2004) – net income (before tax)
divided by the average total assets (weighted average of the average of monthly net assets in the period).
Return on average assets (ROA) – net income (before minority interests) divided by the average total assets
(weighted average of the average of monthly net assets in the period).
Return on equity (Instruction from the Bank of Portugal no. 16/2004) – net income (before tax) divided by
the average attributable equity + non-controlling interests (weighted average of the average of monthly
equity in the period).
Return on equity (ROE) – net income (after minority interests) divided by the average attributable equity,
deducted from preference shares and other capital instruments (weighted average of the average of monthly
equity in the period).
Securities portfolio - debt instruments at amortised cost not associated with credit operations (net of
impairment), financial assets at fair value through profit or loss (excluding the ones related to loans to
customers and trading derivatives), financial assets at fair value through other comprehensive income, assets
with repurchase agreement, financial assets available for sale and financial assets held to maturity (in the
latter two cases until 2017).

2022 REPORT & ACCOUNTS |

|187
Spread - increase (in percentage points) to the index used by the Bank in loans granting or fund raising.
Total customer funds - balance sheet customer funds and off-balance sheet customer funds.

| 2022 REPORT & ACCOUNTS

188 |
Accounts and Notes to the
Consolidated Accounts

2022 REPORT & ACCOUNTS |

|189
CONSOLIDATED INCOME STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2022 AND 2021

| (Thousands of euros)
| Notes | 2022 | 2021
Interest and similar income | 2 | 2,737,235 | 1,709,124
Interest expense and similar charges | 2 | (587,463) | (120,523)
NET INTEREST INCOME |  | 2,149,772 | 1,588,601
Dividends from equity instruments | 3 | 10,086 | 938
Net fees and commissions income | 4 | 771,908 | 727,723
Gains/(losses) on financial operations at fair value through profit or loss | 5 | 27,306 | (247)
Foreign exchange gains/(losses) | 5 | 19,390 | 17,494
Gains/(losses) on hedge accounting | 5 | (2,233) | 4,286
Gains/(losses) arising from derecognition of financial assets and liabilities at amortised cost | 5 | 18,883 | (3,717)
Gains/(losses) arising from derecognition of financial assets at fair value through other comprehensive income | 5 | (13,386) | 68,722
Other operating income/(losses) | 6 | (193,112) | (128,905)
TOTAL OPERATING INCOME |  | 2,788,614 | 2,274,895
Staff costs | 7 | 580,807 | 654,270
Other administrative costs | 8 | 352,961 | 324,172
Amortisations and depreciations | 9 | 139,250 | 137,156
TOTAL OPERATING EXPENSES |  | 1,073,018 | 1,115,598
NET OPERATING INCOME BEFORE PROVISIONS AND IMPAIRMENTS |  | 1,715,596 | 1,159,297
Results on modification | 10 | (309,865) | —
Impairment of financial assets at amortised cost | 11 | (300,829) | (352,833)
Impairment of financial assets at fair value through other comprehensive income | 12 | 5,023 | (4,626)
Impairment of other assets | 13 | (192,059) | (60,882)
Other provisions | 14 | (568,297) | (642,726)
NET OPERATING INCOME |  | 349,569 | 98,230
Share of profit of associates accounted for using the equity method | 15 | 68,722 | 56,937
Gains/(losses) on disposal of subsidiaries and other assets | 16 | 10,167 | 2,570
NET INCOME BEFORE INCOME TAXES |  | 428,458 | 157,737
Income taxes |  |  |
Current | 31 | (109,632) | (81,353)
Deferred | 31 | (194,688) | (122,273)
NET INCOME AFTER INCOME TAXES FROM CONTINUING OPERATIONS |  | 124,138 | (45,889)
Net income from discontinued or discontinuing operations | 17 | 5,537 | 70,881
NET INCOME AFTER INCOME TAXES |  | 129,675 | 24,992
Net income for the year attributable to: |  |  |
Bank's Shareholders |  | 207,497 | 138,082
Non-controlling interests | 44 | (77,822) | (113,090)
NET INCOME FOR THE YEAR |  | 129,675 | 24,992
Earnings per share (in Euros) |  |  |
Basic | 18 | 0.011 | 0.007
Diluted | 18 | 0.011 | 0.007

CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the consolidated financial statements.

| 2022 REPORT & ACCOUNTS

190 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED 31 DECEMBER 2022 AND 2021

(Thousands of euros)
| 2022
|  |  |  | Attributable to
| Continuing operations | Discontinued operations | Total | Bank's Shareholders | Non- controlling interests
NET INCOME FOR THE YEAR | 124,138 | 5,537 | 129,675 | 207,497 | (77,822)
ITEMS THAT MAY BE RECLASSIFIED TO THE INCOME STATEMENT (NOTE 43) |  |  |  |  |
Debt instruments at fair value through other comprehensive income |  |  |  |  |
Gains / (losses) for the year | (271,021) | — | (271,021) | (250,622) | (20,399)
Reclassification of (gains) / losses to profit or loss (note 5) | 13,386 | — | 13,386 | 13,501 | (115)
Cash flows hedging |  |  |  |  |
Gains / (losses) for the year | (1,646,366) | — | (1,646,366) | (1,644,333) | (2,033)
Other comprehensive income from investments in associates and others | (107,723) | — | (107,723) | (107,726) | 3
Exchange differences arising on consolidation | 12,616 | — | 12,616 | 18,184 | (5,568)
IAS 29 application |  |  |  |  |
Effect on equity of Banco Millennium Atlântico, S.A. | 5,745 | — | 5,745 | 5,745 | —
Fiscal impact | 589,842 | — | 589,842 | 585,630 | 4,212
| (1,403,521) | — | (1,403,521) | (1,379,621) | (23,900)
ITEMS THAT WILL NOT BE RECLASSIFIED TO THE INCOME STATEMENT |  |  |  |  |
Equity instruments at fair value through other comprehensive income |  |  |  |  |
Gains / (losses) for the year (note 43) | (3,796) | — | (3,796) | (3,183) | (613)
Changes in own credit risk of financial liabilities at fair value through profit or loss (note 43) | (63) | — | (63) | (63) | —
Actuarial gains / (losses) for the year |  |  |  |  |
BCP Group Pension Fund (note 50) | 375,689 | — | 375,689 | 375,689 | —
Pension Funds of foreign subsidiaries and associated companies | 8,391 | — | 8,391 | 6,904 | 1,487
Fiscal impact | (136,759) | — | (136,759) | (136,681) | (78)
| 243,462 | — | 243,462 | 242,666 | 796
Other comprehensive income / (loss) for the year | (1,160,059) | — | (1,160,059) | (1,136,955) | (23,104)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR | (1,035,921) | 5,537 | (1,030,384) | (929,458) | (100,926)

CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the consolidated financial statements.

2022 REPORT & ACCOUNTS |

|191

(Thousands of euros)
| 2021
|  |  |  | Attributable to
| Continuing operations | Discontinued operations | Total | Bank's Shareholders | Non- controlling interests
NET INCOME FOR THE YEAR | (45,889) | 70,881 | 24,992 | 138,082 | (113,090)
ITEMS THAT MAY BE RECLASSIFIED TO THE INCOME STATEMENT (NOTE 43) |  |  |  |  |
Debt instruments at fair value through other comprehensive income |  |  |  |  |
Gains / (losses) for the year | (235,067) | — | (235,067) | (129,584) | (105,483)
Reclassification of (gains) / losses to profit or loss (note 5) | (68,722) | — | (68,722) | (67,312) | (1,410)
Cash flows hedging |  |  |  |  |
Gains / (losses) for the year | (402,269) | — | (402,269) | (365,881) | (36,388)
Other comprehensive income from investments in associates and others | (2,723) | — | (2,723) | (2,717) | (6)
Exchange differences arising on consolidation | 111,698 | (2,129) | 109,569 | 78,410 | 31,159
IAS 29 application |  |  |  |  |
Effect on equity of Banco Millennium Atlântico, S.A. | (1,040) | — | (1,040) | (1,040) | —
Fiscal impact | 185,425 | — | 185,425 | 158,263 | 27,162
| (412,698) | (2,129) | (414,827) | (329,861) | (84,966)
ITEMS THAT WILL NOT BE RECLASSIFIED TO THE INCOME STATEMENT |  |  |  |  |
Equity instruments at fair value through other comprehensive income |  |  |  |  |
Gains / (losses) for the year (note 43) | 1,073 | 85 | 1,158 | 1,231 | (73)
Changes in own credit risk of financial liabilities at fair value through profit or loss (note 43) | (348) | — | (348) | (348) | —
Actuarial gains / (losses) for the year |  |  |  |  |
BCP Group Pensions Fund (note 50) | 135,285 | — | 135,285 | 135,285 | —
Pension Funds of foreign subsidiaries and associated companies | (697) | — | (697) | (1,123) | 426
Fiscal impact | (7,287) | — | (7,287) | (7,256) | (31)
| 128,026 | 85 | 128,111 | 127,789 | 322
Other comprehensive income / (loss) for the year | (284,672) | (2,044) | (286,716) | (202,072) | (84,644)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR | (330,561) | 68,837 | (261,724) | (63,990) | (197,734)

CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the consolidated financial statements.

| 2022 REPORT & ACCOUNTS

192 |
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2022 AND 2021

(Thousands of euros)
| Notes | 2022 | 2021
ASSETS |  |  |
Cash and deposits at Central Banks | 19 | 6,022,001 | 7,796,299
Loans and advances to credit institutions repayable on demand | 20 | 213,460 | 361,786
Financial assets at amortised cost |  |  |
Loans and advances to credit institutions | 21 | 963,434 | 453,213
Loans and advances to customers | 22 | 54,675,793 | 54,972,401
Debt securities | 23 | 13,035,582 | 8,205,196
Financial assets at fair value through profit or loss |  |  |
Financial assets held for trading | 24 | 766,597 | 931,485
Financial assets not held for trading mandatorily at fair value through profit or loss | 24 | 552,679 | 990,938
Financial assets at fair value through other comprehensive income | 24 | 7,461,553 | 12,890,988
Hedging derivatives | 25 | 59,703 | 109,059
Investments in associated companies | 26 | 298,717 | 462,338
Non-current assets held for sale | 27 | 499,035 | 780,514
Investment property | 28 | 15,217 | 2,870
Other tangible assets | 29 | 574,697 | 600,721
Goodwill and intangible assets | 30 | 182,687 | 256,213
Current tax assets |  | 17,945 | 17,283
Deferred tax assets | 31 | 2,938,986 | 2,688,216
Other assets | 32 | 1,582,455 | 1,385,292
TOTAL ASSETS |  | 89,860,541 | 92,904,812
LIABILITIES |  |  |
Financial liabilities at amortised cost |  |  |
Resources from credit institutions | 33 | 1,468,360 | 8,896,074
Resources from customers | 34 | 75,430,143 | 69,560,227
Non subordinated debt securities issued | 35 | 1,482,086 | 2,188,363
Subordinated debt | 36 | 1,333,056 | 1,394,780
Financial liabilities at fair value through profit or loss |  |  |
Financial liabilities held for trading | 37 | 241,506 | 231,241
Financial liabilities at fair value through profit or loss | 38 | 1,817,678 | 1,581,778
Hedging derivatives | 25 | 178,000 | 377,206
Provisions | 39 | 561,786 | 458,744
Current tax liabilities |  | 23,680 | 20,427
Deferred tax liabilities | 31 | 11,708 | 16,932
Other liabilities | 40 | 1,391,973 | 1,116,983
TOTAL LIABILITIES |  | 83,939,976 | 85,842,755
EQUITY |  |  |
Share capital | 41 | 3,000,000 | 4,725,000
Share premium | 41 | 16,471 | 16,471
Other equity instruments | 41 | 400,000 | 400,000
Legal and statutory reserves | 42 | 268,534 | 259,528
Reserves and retained earnings | 43 | 1,245,949 | 580,304
Net income for the year attributable to Bank's Shareholders |  | 207,497 | 138,082
TOTAL EQUITY ATTRIBUTABLE TO BANK'S SHAREHOLDERS |  | 5,138,451 | 6,119,385
Non-controlling interests | 44 | 782,114 | 942,672
TOTAL EQUITY |  | 5,920,565 | 7,062,057
TOTAL LIABILITIES AND EQUITY |  | 89,860,541 | 92,904,812

CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the consolidated financial statements.

2022 REPORT & ACCOUNTS |

|193
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED 31 DECEMBER 2022 AND 2021

(Thousands of euros)
| 2022 | 2021
CASH FLOWS ARISING FROM OPERATING ACTIVITIES |  |
Interests received | 2,297,720 | 1,610,633
Commissions received | 1,019,734 | 925,786
Fees received from services rendered | 101,771 | 110,095
Interests paid | (363,636) | (182,934)
Commissions paid | (176,465) | (145,957)
Recoveries on loans previously written off | 20,837 | 22,938
Net earned insurance premiums | — | 20,975
Claims incurred of insurance activity | — | (7,827)
Payments (cash) to suppliers and employees (*) | (1,220,319) | (1,250,979)
Income taxes (paid) / received | (65,340) | (61,834)
| 1,614,302 | 1,040,896
Decrease / (increase) in operating assets: |  |
Receivables from / (Loans and advances to) credit institutions | (227,767) | 204,997
Deposits held with purpose of monetary control | (280,418) | 190,049
Loans and advances to customers receivable / (granted) | (656,569) | (4,192,195)
Short term trading securities | 136,605 | 45,161
Increase / (decrease) in operating liabilities: |  |
Loans and advances to credit institutions repayable on demand | (25,447) | (42,783)
Deposits from credit institutions with agreed maturity date | (7,518,189) | 94,089
Loans and advances to customers repayable on demand | (274,554) | 6,589,819
Deposits from customers with agreed maturity date | 6,652,456 | 481,649
| (579,581) | 4,411,682
CASH FLOWS ARISING FROM INVESTING ACTIVITIES |  |
Assignment of investments in subsidiaries and associates which results in loss of control (**) | — | 4,809
Acquisition of investments in subsidiaries | — | (2,252)
Dividends received | 54,263 | 16,651
Interest income from financial assets at fair value through other comprehensive income and at amortised cost | 342,405 | 199,303
Sale of financial assets at fair value through other comprehensive income and at amortised cost | 7,922,631 | 6,552,698
Acquisition of financial assets at fair value through other comprehensive income and at amortised cost | (50,657,550) | (58,763,208)
Maturity of financial assets at fair value through other comprehensive income and at amortised cost | 42,276,068 | 49,315,510
Acquisition of tangible and intangible assets | (126,189) | (80,464)
Sale of tangible and intangible assets | 9,434 | 13,614
Decrease / (increase) in other sundry assets | (386,643) | 44,657
| (565,581) | (2,698,682)
CASH FLOWS ARISING FROM FINANCING ACTIVITIES |  |
Issuance of subordinated debt | 133,700 | 300,000
Reimbursement of subordinated debt | (133,700) | (305,368)
Issuance of debt securities | 402,264 | 998,439
Reimbursement of debt securities | (1,156,473) | (246,018)
Issuance of commercial paper and other securities | 34,505 | 105,708
Reimbursement of commercial paper and other securities | (12,374) | (26,074)
Dividends paid to Bank's shareholders | (13,603) | —
Dividends paid to non-controlling interests | (59,572) | (17,516)
Interest paid of the issue of Perpetual Subordinated Bonds (Additional Tier 1) | (37,000) | (37,000)
Increase / (decrease) in other sundry liabilities and non-controlling interests (***) | 52,175 | (2,914)
| (790,078) | 769,257
Exchange differences effect on cash and equivalents | 12,616 | 109,569
Net changes in cash and equivalents | (1,922,624) | 2,591,826
Cash (note 18) | 601,772 | 579,997
Deposits at Central Banks (note 18) | 7,194,527 | 4,723,867
Loans and advances to credit institutions repayable on demand (note 19) | 361,786 | 262,395
CASH AND EQUIVALENTS AT THE BEGINNING OF THE YEAR | 8,158,085 | 5,566,259
Cash (note 18) | 593,033 | 601,772
Deposits at Central Banks (note 18) | 5,428,968 | 7,194,527
Loans and advances to credit institutions repayable on demand (note 19) | 213,460 | 361,786
CASH AND EQUIVALENTS AT THE END OF THE YEAR | 6,235,461 | 8,158,085

(*) In 2022, this balance includes the amount of Euros 590,000 (2021: Euros 581,000) related to short-term lease contracts and the amount of Euros
2,402,000 (2021: Euros 2,564,000) related to lease contracts of low value assets.
(**) As in 2021, Banco Privée BCP (Suisse) S.A. and Seguradora Internacional de Moçambique, S.A. (now designated Fidelidade Moçambique - Companhia de
Seguros S.A.) were considered discontinued operations, the respective amounts, net of intra-group operations, were incorporated into cash flows arising
from investing operations.
(***) In 2022, this balance includes the amount of Euros 53,330,000 (2021: Euros 58,206,000) corresponding to principal payments on lease liabilities.
CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the consolidated financial statements.

| 2022 REPORT & ACCOUNTS

194 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARS ENDED 31 DECEMBER 2022 AND 2021

(Thousands of euros)
| Share capital | Share premium | Other equity instruments | Legal and statutory reserves | Treasury shares | Reserves and retained earnings | Net income for the year attributable to Bank's Shareholders | Equity attributable to Bank's Shareholders | Non- - controlling interests (note 44) | Total equity
BALANCE AS AT 31 DECEMBER 2020 | 4,725,000 | 16,471 | 400,000 | 254,464 | (40) | 642,397 | 183,012 | 6,221,304 | 1,164,966 | 7,386,270
Net income for the year | — | — | — | — | — | — | 138,082 | 138,082 | (113,090) | 24,992
Other comprehensive income | — | — | — | — | — | (202,072) | — | (202,072) | (84,644) | (286,716)
TOTAL COMPREHENSIVE INCOME | — | — | — | — | — | (202,072) | 138,082 | (63,990) | (197,734) | (261,724)
Results application |  |  |  |  |  |  |  |  |  |
Legal reserve | — | — | — | 5,064 | — | (5,064) | — | — | — | —
Transfers for reserves and retained earnings | — | — | — | — | — | 183,012 | (183,012) | — | — | —
Interest of Perpetual Subordinated Bonds (Additional Tier 1) (note 40) | — | — |  | — | — | (37,000) | — | (37,000) | — | (37,000)
Acquisition of subsidiaries | — | — | — | — | — | — | — | — | (1,906) | (1,906)
Sale and loss of control of subsidiaries | — | — | — | — | — | — | — | — | (4,556) | (4,556)
Dividends (a) | — | — | — | — | — | — | — | — | (17,516) | (17,516)
Treasury shares | — | — | — | — | 40 | — | — | 40 | — | 40
Other reserves | — | — | — | — | — | (969) | — | (969) | (582) | (1,551)
BALANCE AS AT 31 DECEMBER 2021 | 4,725,000 | 16,471 | 400,000 | 259,528 | — | 580,304 | 138,082 | 6,119,385 | 942,672 | 7,062,057
Net income for the year | — | — | — | — | — | — | 207,497 | 207,497 | (77,822) | 129,675
Other comprehensive income | — | — | — | — | — | (1,136,955) | — | (1,136,955) | (23,104) | (1,160,059)
TOTAL COMPREHENSIVE INCOME | — | — | — | — | — | (1,136,955) | 207,497 | (929,458) | (100,926) | (1,030,384)
Results application |  |  |  |  |  |  |  |  |  |
Legal reserve (note 42) | — | — | — | 9,006 | — | (9,006) | — | — | — | —
Transfers for reserves and retained earnings | — | — | — | — | — | 138,082 | (138,082) | — | — | —
Dividends paid |  |  |  |  |  | (13,603) | — | (13,603) | — | (13,603)
Reduction of share capital | (1,725,000) | — | — | — | — | 1,725,000 | — | — | — | —
Interests of perpetual subordinated bonds (AT1) | — | — |  | — | — | (37,000) | — | (37,000) | — | (37,000)
Dividends (b) | — | — | — | — | — | — | — | — | (59,572) | (59,572)
Other reserves (note 43) | — | — | — | — | — | (873) | — | (873) | (60) | (933)
BALANCE AS AT 31 DECEMBER 2022 | 3,000,000 | 16,471 | 400,000 | 268,534 | — | 1,245,949 | 207,497 | 5,138,451 | 782,114 | 5,920,565

(a) Dividends of BIM - Banco Internacional de Moçambique, S.A. and Seguradora Internacional de Moçambique, S.A. (now designated Fidelidade Moçambique - Companhia de
Seguros S.A.)
(b) Dividends of BIM - Banco Internacional de Moçambique, S.A.
CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the consolidated financial statements.

2022 REPORT & ACCOUNTS |

195 |
1.Accounting policies
A.Basis of presentation
Banco Comercial Português, S.A. (the ‘Bank’) is a private capital bank, established in Portugal in 1985. It started
operating on 5 May 1986, and these consolidated financial statements reflect the results of the operations of the Bank
and all its subsidiaries (together referred to as the ‘Group’) and the Group’s interest in associates, for the years ended
on 31 December 2022 and 2021.
In accordance with Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of 19 July 2002, and
Bank of Portugal Notice no. 5/2015 (which revoked Bank of Portugal Notice no. 1/2005), the Group’s consolidated
financial statements are required to be prepared, since 2005, in accordance with International Financial Reporting
Standards (IFRS) as endorsed by the European Union (EU). IFRS comprise accounting standards issued by the
International Accounting Standards Board (IASB), as well as interpretations issued by the International Financial
Reporting Interpretations Committee (IFRIC) and its predecessor bodies. The consolidated financial statements and the
accompanying notes were approved on 27 March 2023 by the Bank's Board of Directors and are presented in thousands
of euros, rounded to the nearest thousand.
All the references in this document related to any normative always report to the respective current version.
The consolidated financial statements for the year ended on 31 December 2022 were prepared for the purpose of
recognition and measurement, in accordance with the IFRS approved by the EU that are effective on that date.
These consolidated financial statements are a translation of the financial statements originally issued in Portuguese. In
the event of discrepancies, the Portuguese version prevails.
A1.Comparative information
The Group has adopted IFRS and interpretations mandatory for accounting periods beginning on or after 1 January 2022.
The accounting policies were applied consistently to all entities of the Group and are consistent with those used in the
preparation of the financial statements of the previous period.
The Group's financial statements were prepared under the going concern assumption, the accrual-based accounting
regime and under the historical cost convention, as modified by the application of fair value for derivative financial
instruments, financial assets and liabilities at fair value through profit or loss and financial assets at fair value through
other comprehensive income. Financial assets and liabilities that are covered under hedge accounting are stated at fair
value in respect of the risk that is being hedged, if applicable. Other financial assets and liabilities and non-financial
assets and liabilities are stated at amortised cost or historical cost. Non-current assets and disposal groups held for sale
are stated at the lower of carrying amount or fair value less costs to sell. The liability for defined benefit obligations is
recognised as the present value of the past liabilities with pensions net of the value of the fund's assets.
The preparation of the financial statements in accordance with IFRS requires the Board of Directors, under advice of
the Executive Committee, to make judgments, estimations and assumptions that affect the application of the
accounting policies and reported amounts of assets, liabilities, income and expenses. The estimations and associated
assumptions are based on historical experience and other factors that are believed to be reasonable under the
circumstances and form the basis for making the judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these estimations. The issues involving a higher
degree of judgment or complexity or for which assumptions and estimations are significant are presented in note 1.Y.
B.Basis of consolidation
As from 1 January 2010, the Group began to apply IFRS 3 (revised) for the accounting of business combinations. The
changes in the accounting policies resulting from the application of IFRS 3 (revised) are applied prospectively.
The consolidated financial statements now presented reflect the assets, liabilities, income and expenses of the Bank
and its subsidiaries (the Group), and the results attributable to the Group financial investments in associates.

| 2022 REPORT & ACCOUNTS

196 |
B1.Investments in subsidiaries
Subsidiaries are entities controlled by the Group (including structure entities and investment funds). The Group controls
an entity when it holds the power to direct the relevant activities of the entity, and when it is exposed, or has rights,
to variable returns from its involvement with the entity and can take possession of these results through the power it
holds over the relevant activities of that entity (de facto control). The financial statements of subsidiaries are included
in the consolidated financial statements from the date on which control commences until the date on which control
ceases.
Accumulated losses are attributed to non-controlling interests in the respective proportion, implying that the Group can
recognise negative non-controlling interests.
On a step acquisition process resulting in the acquisition of control, the revaluation of any participation previously
acquired is recorded against the profit and loss account when goodwill is calculated. On a partial disposal resulting in
loss of control over a subsidiary, any participation retained is revalued at market value on the sale date and the gain or
loss resulting from this revaluation is booked against the income statement.
B2.Investments in associates
Investments in associated companies are registered by the equity method from the date that the Group acquires
significant influence until the date it ceases to exist. Associates are those entities in which the Group has significant
influence but not control over the financial and operating policy decisions of the investee. It is assumed that the Group
has significant influence when it holds, directly or indirectly, more than 20% or of the voting rights of the investee. If
the Group holds, directly or indirectly, less than 20% of the voting rights of the investee, it is presumed that the Group
does not have significant influence, unless such influence can be clearly demonstrated.
The existence of significant influence by the Group is usually evidenced in one or more of the following ways:
-representation on the Board of Directors or equivalent governing body of the investee;
-participation in policy-making processes, including participation in decisions about dividends or other distributions;
-material transactions between the Group and the investee;
-interchange of the management team;
-provision of essential technical information.
The consolidated financial statements include the part that is attributable to the Group of the total reserves and
results of associated companies accounted on an equity basis. When the Group’s share of losses exceeds its interest in
the associate, the carrying amount is reduced to zero and recognition of further losses is discontinued, with exception
of the part in which the Group incurs in a legal obligation to assume these losses on behalf of an associate.
B3.Goodwill
Business combinations are accounted under the purchase method. The acquisition cost corresponds to the fair value,
determined at the acquisition date, of the assets given and liabilities incurred or assumed. Costs directly attributable
to the acquisition of a subsidiary are recorded directly in the income statement.
Positive goodwill arising from acquisitions is recognised as an asset carried at acquisition cost and is not subject to
amortisation, however, it is subject to impairment tests. Goodwill arising from the acquisition of subsidiaries and
associates is defined as the difference between the cost of acquisition and the total or corresponding share of the fair
value of the net assets and contingent liabilities acquired, depending on the option taken.
Negative goodwill arising from an acquisition is recognised directly in the income statement of the period in which the
business combination occurs.
Goodwill is not adjusted due to changes in the initial estimation of the contingent purchase price, being the difference
recorded in the income statement or in equity, when applicable.

2022 REPORT & ACCOUNTS |

| 197
According to IFRS 3 – Business combinations, if the initial accounting of a business combination is not concluded until
the end of the first financial reporting period in which the combination occurs, it is recorded at the respective
provisional values. These provisional values can be adjusted over the measurement period, which can’t exceed a year
since the acquisition date. Over this period, the Group should retrospectively adjust the amounts recognised previously
on the acquisition date, to reflect newly obtained information about facts and circumstances that existed at the
acquisition date and that, if they were known by then, would have impacted the measurement of the amounts
recognised at that date.
During this period, the Group should also recognise additional assets and liabilities in the case of obtaining new
information about facts and circumstances that existed at the acquisition date and that, if they were known by then,
would have resulted in the recognition of those assets and liabilities at that time.
The recoverable amount of the goodwill registered in the Group's asset is assessed annually in the preparation of the
accounts with reference to the end of the year or whenever there are indications of eventual loss of value. Impairment
losses are recognised in the income statement. The recoverable amount is determined based on the higher of the asset
value in use and the market value after deducting selling costs, calculated using valuation methodologies supported by
discounted cash flow techniques, considering market conditions, the time value of money and the business risks.
B4.Purchases and dilution of non-controlling interests
The acquisition of non-controlling interests that do not impact the control position of a subsidiary is accounted as a
transaction with shareholders and, therefore, no additional goodwill resulting from this transaction is recognised. The
difference between the acquisition cost and the fair value of non-controlling interests acquired is recognised directly in
reserves. On this basis, the gains and losses resulting from the sale of controlling interests that do not impact the
control position of a subsidiary are always recognised against reserves.
B5.Loss of control
The gains and losses resulting from the dilution or sale of a financial position in a subsidiary, with loss of control, are
recognised by the Group in the income statement.
B6.Investments in foreign subsidiaries and associates
The financial statements of foreign subsidiaries and associates of the Group are prepared in their functional currency,
defined as the currency of the primary economic environment in which they operate or the currency in which the
subsidiaries obtain their income or finance their activity. In the consolidation process, assets and liabilities, including
goodwill, of foreign subsidiaries are converted into euros at the official exchange rate on the balance sheet date.
Regarding the investments in foreign operations that are consolidated under the full consolidation or equity methods,
exchange differences, between the conversion to euros of the equity at the beginning of the year and its value in euros
at the exchange rate on the balance sheet date in which the consolidated accounts are reported, are recognised against
“Reserves - exchange differences”. The changes in fair value resulting from instruments that are designated and
qualified as hedging instruments related to foreign operations are recorded in equity under "Reserves and retained
earnings". Whenever the hedge is not fully effective, the ineffective portion is accounted against profit and loss of the
year.
The income and expenses of these subsidiaries are converted to euros at an approximate rate of the rates on the dates
of the transactions, using a monthly average considering the initial and final exchange rates of each month. Exchange
differences from the conversion to euros of the profits and losses for the reporting period, arising from the difference
between the exchange rate used in the income statement and the exchange rate prevailing at the balance sheet date,
are recognised in "Reserves and retained earnings - exchange differences resulting from the consolidation of Group's
companies". The exchange rates used by the Group are detailed in note 54.
On disposal of investments in foreign subsidiaries for which there is loss of control, exchange differences related to the
investment in the foreign operation and to the associated hedge transaction previously recognised in reserves are
transferred to profit and loss, as part of the gains or loss arising from the disposal.

| 2022 REPORT & ACCOUNTS

198 |
The Group applies IAS 29 – Financial reporting in hyperinflationary economies in financial statements of entities that
present accounts in functional currency of an economy that has hyperinflation. In applying this policy, non-monetary
assets and liabilities are adjusted based on the price index from the date of acquisition or the date of the last
revaluation until 31 December 2021. The restated values of assets are reduced by the amount that exceeds their
recoverable amount, in accordance with the applicable IFRS.
Equity components are also updated considering the price index from the beginning of the period or date of the
contribution if it is earlier.
When the classification as a hyperinflationary economy is applied to associated companies, its effects are included in
the Group's financial statements by applying the equity method of accounting on the financial statements restated in
accordance with the requirements of IAS 29. The effects of the application of IAS 29 with impact on capital items are
recognised against the item "Reserves and retained earnings".
In accordance with the requirements provided in IAS 29, Angola was considered as a hyperinflationary economy until 31
December 2018. This classification is no longer applicable as of 1 January 2019.
B7.Transactions eliminated on consolidation
The balances and transactions between Group's companies, as well as any unrealised gains and losses arising from these
transactions, are eliminated in the preparation of the consolidated financial statements. Unrealised gains and losses
arising from transactions with associates and jointly controlled entities are eliminated in the proportion of the Group's
investment in these entities.
C.Financial instruments (IFRS 9)
C1.Financial assets
C1.1.Classification, initial recognition and subsequent measurement
At the initial recognition, financial assets are classified into one of the following categories:
–“Financial assets at amortised cost”;
–“Financial assets at fair value through other comprehensive income”; or,
–“Financial assets at fair value through profit or loss”.
The classification is made taking into consideration the following aspects:
–the Group's business model for the management of the financial asset; and,
–the characteristics of the contractual cash flows of the financial asset.
Business Model Evaluation
With reference to 1 January 2018, the Group carried out an evaluation of the business model in which the financial
instruments are held at portfolio level, since this approach reflects how assets are managed and how that information
is made available to management bodies. The information considered in this evaluation included:
–the policies and purposes established for the portfolio and the practical operability of these policies, including how
the management strategy focuses on receiving contractual interest, maintaining a certain interest rate profile,
adjusting the duration of financial assets to the duration of liabilities that finance these assets or on the realization
of cash flows through the sale of the assets;
–how the performance of the portfolio is evaluated and reported to the Group's management bodies;
–the evaluation of the risks that affect the performance of the business model (and of the financial assets held under
this business model) and the way these risks are managed;
–the remuneration of business managers, i.e., in what way the compensation depends on the fair value of the assets
under management or on contractual cash flows received; and,
–the frequency, volume and sales periodicity in previous periods, the reasons for these sales and the expectations
about future sales. However, sales information should not be considered individually, but as part of an overall
assessment of how the Group establishes financial asset management objectives and how cash flows are obtained.

2022 REPORT & ACCOUNTS |

| 199
Financial assets held for trading and financial assets managed and evaluated at fair value by option are measured at
fair value through profit or loss because they are not held either for the collection of contractual cash flows (HTC), nor
for the collection of cash flows and sale of these financial assets (HTC and Sell).
Evaluation if the contractual cash flows correspond to Solely Payments of Principal and Interest (SPPI)
For the purposes of this assessment, "principal" is defined as the fair value of the financial asset at initial recognition.
"Interest" is defined as the counterparty for the time value of money, for the credit risk associated with the amount
owed over a given period and for other risks and costs associated with the activity (e.g., liquidity risk and
administrative costs), as well as for a profit margin.
In the evaluation of the financial instruments in which contractual cash flows refer exclusively to the receipt of
principal and interest, the Group considered the original contractual terms of the instrument. This evaluation included
the analysis of the existence of situations in which the contractual terms can modify the periodicity and the amount of
the cash flows so that they do not fulfil the SPPI condition. In the evaluation process, the Group considered:
–contingent events that may change the periodicity and the amount of the cash flows;
–characteristics that result in leverage;
–terms of prepayment and extension of maturity;
–terms that may limit the right of the Group to claim cash flows in relation to specific assets (e.g., contracts with
terms that prevent access to assets in case of default – non-recourse asset); and,
–characteristics that may change the time value of money.
In addition, an advance payment is consistent with the SPPI criterion if:
–the financial asset is acquired or originated with a premium or discount in relation to the contractual nominal value;
–the prepayment represents substantially the nominal amount of the contract plus accrued contractual interest, but
not paid (may include reasonable compensation for prepayment); and,
–the prepaid fair value is insignificant at initial recognition.
C1.1.1.Financial assets at amortised cost
Classification
A financial asset is classified under the category "Financial assets at amortised cost" if both of the following conditions
are met:
–the financial asset is held within a business model whose objective is to hold financial assets in order to collect their
contractual cash flows; and,
–its contractual cash flows occur on specific dates and are solely payments of principal and interest on the principal
amount outstanding (SPPI).
The "Financial assets at amortised cost" category includes loans and advances to credit institutions, loans and advances
to customers and debt instruments managed based on a business model whose purpose is to receive their contractual
cash flows (government bonds, bonds issued by companies and commercial paper).
Initial recognition and subsequent measurement
Loans and advances to credit institutions and loans and advances to customers are recognised at the date the funds are
made available to the counterparty (settlement date). Debt instruments are recognised on the trade date, that is, on
the date the Group accepts to acquire them.
Financial assets at amortised cost are initially recognised at fair value plus transaction costs and are subsequently
measured at amortised cost. In addition, they are subject, at their initial recognition, to the measurement of
impairment losses for expected credit losses (note C1.5), which are recognised in "'Impairment of financial assets
measured at amortised cost".
Interest of financial assets at amortised cost is recognised under "Interest and similar income", based on the effective
interest rate method and in accordance with the criteria described in note C3.
Gains or losses generated at the time of derecognition are registered in "Gains/(losses) with derecognition of financial
assets and liabilities at amortised cost".

| 2022 REPORT & ACCOUNTS

200 |
C1.1.2.Financial assets at fair value through other comprehensive income
Classification
A financial asset is classified under the category of "Financial assets at fair value through other comprehensive income"
if both of the following conditions are met:
–the financial asset is held within a business model whose objective is both to collect its contractual cash flows and
to sell this financial asset; and,
–its contractual cash flows occur on specific dates and are solely payments of principal and interest on the principal
amount outstanding (SPPI).
In addition, at the initial recognition of an equity instrument that is not held for trading, nor a contingent retribution
recognised by an acquirer in a business combination to which IFRS 3 applies, the Group may irrevocably choose to
classify it in the category of "Financial assets at fair value through other comprehensive income" (FVOCI). This option is
exercised on a case-by-case basis and is only available for financial instruments that comply with the definition of
equity instruments provided in IAS 32 and cannot be used for financial instruments whose classification as an equity
instrument under the scope of the issuer is made under the exceptions provided in paragraphs 16A to 16D of IAS 32.
Initial recognition and subsequent measurement
Debt instruments at fair value through other comprehensive income are initially recognised at fair value plus
transaction costs and are subsequently measured at fair value. Changes in the fair value of these financial assets are
recognised against other comprehensive income and, at the time of their disposal, the respective gains or losses
accumulated in other comprehensive income are reclassified to a specific income statement item designated "Gains or
losses on derecognition of financial assets at fair value through other comprehensive income”.
Debt instruments at fair value through other comprehensive income are also subject, from their initial recognition, to
the measurement of impairment losses for expected credit losses (note C1.5). Impairment losses are recognised in the
income statement under "Impairment of financial assets at fair value through other comprehensive income", against
“Other comprehensive income”, and do not reduce the carrying amount of the financial asset in the balance sheet.
Interest, premiums or discounts on financial assets at fair value through other comprehensive income are recognised in
"Interest and similar income", based on the effective interest rate method and in accordance with the criteria described
in note C3.
Equity instruments at fair value through other comprehensive income are initially recognised at fair value plus
transaction costs and are subsequently measured at fair value. The changes in the fair value of these financial assets
are recognised against “Other comprehensive income”. Dividends are recognised in the income statement when the
right to receive them is attributed.
Impairment is not recognised for equity instruments at fair value through other comprehensive income, and the
respective accumulated gains or losses recognised in “Fair value changes” are transferred to “Retained earnings” at the
time of their derecognition.
C1.1.3.Financial assets at fair value through profit or loss
Classification
A financial asset is classified in the category "Financial assets at fair value through profit and loss" if the business model
defined by the Group for its management or the characteristics of its contractual cash flows do not meet the conditions
described above to be measured at amortised cost or at fair value through other comprehensive income (FVOCI).
In addition, the Group may irrevocably designate a financial asset at fair value through profit or loss that meets the
criteria to be measured at amortised cost or at FVOCI at the time of its initial recognition if this eliminates or
significantly reduces an inconsistency in measurement or recognition (accounting mismatch), that will otherwise arise
from measuring assets or liabilities or recognising their gains and losses in different bases.

2022 REPORT & ACCOUNTS |

| 201
The Group classified "Financial assets at fair value through profit and loss" in the following items:
a)“Financial assets held for trading”
These financial assets are acquired with the purpose of short-term selling; at the initial recognition, they are part of a
portfolio of identified financial instruments and for which there is evidence of profit-taking in the short-term; or they
can be defined as derivatives (except for hedging derivatives).
b)“Financial assets not held for trading mandatorily at fair value through profit or loss”
This item classifies debt instruments whose contractual cash flows do not correspond only to repayments of principal
and interest on the principal amount outstanding (SPPI).
c)“Financial assets designated at fair value through profit or loss”
This item includes the financial assets that the Group has chosen to designate at fair value through profit or loss to
eliminate accounting mismatch.
Initial recognition and subsequent measurement
Considering that the transactions carried out by the Group in the normal course of its business are in market conditions,
financial assets at fair value through profit or loss are initially recognised at their fair value, with the costs or income
associated with the transactions recognised in profit and loss at the initial moment. Subsequent changes in the fair
value of these assets are recognised in profit and loss.
The accrual of interest and of the premium/discount (when applicable) is recognised in "Net interest income", based on
the effective interest rate of each transaction, except the accrual of interest from trading derivatives that are
recognised in “Gains/(losses) on financial operations at fair value through profit or loss”. Dividends are recognised in
profit and loss when the right to receive them is attributed.
Trading derivatives with a positive fair value are included in the item "Financial assets held for trading", while trading
derivatives with negative fair value are included in "Financial liabilities held for trading".
C1.2.Reclassification between categories of financial assets
Financial assets should be reclassified into other categories only if the business model used in their management has
changed. In this case, all financial assets affected must be reclassified.
The reclassification must be applied prospectively from the date of reclassification and any gains, losses (including the
ones related to impairment) or interest previously recognised should not be restated.
The reclassification of investments in equity instruments measured at fair value through other comprehensive income is
not allowed, nor of financial instruments designated at fair value through profit or loss.
C1.3.Modification and derecognition of financial assets
General principles
i)The Group shall derecognise a financial asset when, and only when:
–the contractual rights to the cash flows from the financial asset expire; or,
–it transfers the financial asset as set out in notes ii) and iii) below and the transfer qualifies for derecognition in
accordance with note iv).
ii)The Group transfers a financial asset if, and only if, it either:
–transfers the contractual rights to receive the cash flows of the financial asset; or,
–retains the contractual rights to receive the cash flows of the financial asset but assumes a contractual obligation to
pay the cash flows to one or more recipients in an arrangement that meets the conditions presented in note iii).

| 2022 REPORT & ACCOUNTS

202 |
iii)When the Group retains the contractual rights to receive the cash flows of a financial asset (the 'original asset'), but
assumes a contractual obligation to pay these cash flows to one or more entities (the 'eventual recipients'), the
Group shall treat the transaction as a transfer of a financial asset if all the following three conditions are met:
–the Group does not have any obligation to pay amounts to the eventual recipients, unless it collects equivalent
amounts from the original asset. Short-term advances with the right of full recovery of the amount lent, plus
accrued interest at market rates, do not violate this condition;
–the Group is contractually prohibited from selling or pledging the original asset other than as a security to the
eventual recipients due its obligation to pay them cash flows; and,
–the Group has an obligation to remit any cash flows it collects on behalf of the eventual recipients without material
delay. In addition, it is not entitled to reinvest such cash flows, except for investments in cash or cash equivalents
(as defined in IAS 7 – Statement of Cash Flows) during the short settlement period from the collection date until the
date of required remittance to the eventual recipients, and interest earned on such investments is passed to the
eventual recipients.
iv) When the Group transfers a financial asset (see note ii) above), it shall evaluate the extent to which it retains the
risks and benefits arising from owning the financial asset. In this case:
–if the Group transfers substantially all the risks and benefits arising from owning the financial asset, it shall
derecognise the financial asset and recognise separately any rights and obligations created or retained in the
transfer, as assets or liabilities;
–if the Group retains substantially all the risks and benefits arising from owning the financial asset, it shall continue
to recognise the financial asset;
–if the Group neither transfers nor retains substantially all the risks and benefits arising from owning the financial
asset, it shall determine whether it retained control of the financial asset. In this case:
a)if the Group did not retain control, it shall derecognise the financial asset and recognise separately, as assets or
liabilities, any rights and obligations created or retained in the transfer;
b)if the Group retained control, it shall continue to recognise the financial asset to the extent of its continued
involvement in the financial asset.
v) The transfer of risks and benefits (see prior note) is evaluated by comparing the Group’s exposure, before and after
the transfer, with the variability in the amounts and timing of the net cash flows of the transferred asset.
vi) The question of whether the Group retained or not control (see note iv) above) over the transferred asset depends
on the transferee's ability to sell the asset. If the transferee has the practical ability to sell the asset in its entirety
to an unrelated third party and can exercise that ability unilaterally without needing to impose additional
restrictions on the transfer, the entity did not retain control. In all other cases, the entity retained control.
Derecognition criteria
In the context of the general principles listed in the previous section, and considering that contract modification
processes may lead, in some circumstances, to the derecognition of the original financial assets and recognition of new
ones (subject to POCI identification), the purpose of this section is to set the criteria and circumstances that may lead
to the derecognition of a financial asset.

2022 REPORT & ACCOUNTS |

| 203
The Bank considers that a modification of the terms and conditions of a credit exposure will result in derecognition of
the transaction and in recognition of a new transaction when the modification translates into at least one of the
following conditions:
–creation of a new exposure that results from a debt consolidation, without any any of the derecognized instruments
having a nominal value higher than 90% of the nominal amount of the new instrument;
–Double extension of the residual maturity, provided that the extension is not shorter than 3 years compared to the
residual maturity in the moment of the modification;
–Increase of on balance exposure by more than 10% compared to the nominal amount (refers to the last approved
amount on the operation subject to modification);
–Change in qualitative features, namely:
i) Change of currency, unless the exchange rate between the old and the new currency is pegged or managed
within limits restricted by law or the relevant monetary authorities;
ii) Exclusion or addition of a substantial equity conversion feature to a debt instrument, unless it is not
reasonably possible that it will be exercised over its term;
iii) Transfer of the instrument’s credit risk to another borrower, or a significant change in the structure of
borrowers within the instrument.
iv) Deletion or addition to the debt instrument of features of the "Pay If You Can" type or dependent on the
financial performance of the debt instrument.
In the case of a restructuring due to financial difficulties of the debtor, only the criteria set out in items ii, iii and iv of
the above paragraph should be checked (the other criteria listed in this paragraph are not relevant in such situations).
Under the regulatory changes that occurred in Poland described in note 48 and those negotiated with customers holding
mortgage loans in foreign currency described in note 57, and which correspond to contractual modifications made in
accordance with IFRS 9, when the cash flows resulting from the agreement are subject to modification and a given
asset is not derecognised, Bank Millennium adjusts the gross book value of the financial asset and recognises the profit
or loss due to the modification in the Income Statement - Results on modification. The adjustment to the gross carrying
amount of a financial asset is the difference between the discounted cash flows before and after contract modification.
Loans written-off
The Group writes off a loan when it does not have reasonable expectations of recovering a financial asset in its entirety
or partially. Loans written-off are recognised in off-balance sheet accounts.
C1.4.Purchased or originated credit-impaired assets
Purchased or originated credit-impaired (POCI) assets are assets that present objective evidence of credit impairment
in the moment of their initial recognition. An asset is credit-impaired if one or more events have occurred with a
negative impact on the estimated future cash flows of the asset.
The two events that lead to the origin of a POCI exposure are presented as follows:
–financial assets arising from a recovery process, where there have been changes to the terms and conditions of the
original agreement, which presented objective evidence of impairment that resulted in its derecognition (note C1.3)
and recognition of a new contract that reflects the credit losses incurred;
–financial assets acquired with a significant discount, where the existence of a significant discount reflects credit
losses incurred at the time of their initial recognition.
At initial recognition, POCI assets do not carry an impairment allowance. Instead, lifetime expected credit losses (ECL)
are incorporated into the calculation of the effective interest rate (EIR). Consequently, at initial recognition, the gross
book value of POCI (initial balance) is accounted for at fair value and it's equal to the net book value before being
recognised as POCI (difference between the initial balance and the total discounted cash flows).

| 2022 REPORT & ACCOUNTS

204 |
C1.5.Impairment losses
C1.5.1.Financial instruments subject to impairment losses recognition
The Group recognises impairment losses for expected credit losses on financial instruments recognised in the following
accounting items:
C1.5.1.1.Financial assets at amortised cost
Impairment losses on financial assets at amortised cost reduce the balance sheet value of these financial assets against
the item "Impairment of financial assets at amortised cost" (in the income statement).
C1.5.1.2.Debt instruments at fair value through other comprehensive income
Impairment losses for debt instruments at fair value through other comprehensive income are recognised in the income
statement under "Impairment of financial assets at fair value through other comprehensive income", against other
comprehensive income (they do not reduce the balance sheet amount of these financial assets).
C1.5.1.3.Credit commitments, documentary credits and financial guarantees
Impairment losses associated with credit commitments, documentary credits and financial guarantees are recognised in
liabilities, under the balance "Provisions for guarantees and other commitments", against "Other provisions" (in the
income statement).
C1.5.2.Classification of financial instruments by stages

| Changes in credit risk since the initial recognition
| Stage 1 | Stage 2 | Stage 3
Classification criterion | Initial recognition | Significant increase in credit risk since initial recognition | Impaired
Impairment losses | 12-month expected credit losses | Lifetime expected credit losses

The Group determines the expected credit losses of each operation as a result of the deterioration of credit risk since
its initial recognition. For this purpose, operations are classified into one of the following three stages:
–Stage 1: the operations in which there is no significant increase in credit risk since its initial recognition are
classified in this stage. Impairment losses associated with operations classified in this stage correspond to expected
credit losses resulting from a default event that may occur within 12 months after the reporting date (12-month
expected credit losses);
–Stage 2: the operations in which there is a significant increase in credit risk since its initial recognition (note C1.5.3)
but are not impaired (note C1.5.4) are classified in this stage. Impairment losses associated with operations
classified in this stage correspond to the expected credit losses resulting from default events that may occur over
the expected residual life of the operations (lifetime expected credit losses);
–Stage 3: impaired operations are classified in this stage. Impairment losses associated with operations classified at
this stage correspond to lifetime expected credit losses.
C1.5.3.Significant increase in credit risk (SICR)
Significant increase in credit risk (SICR) is determined according to a set of mostly quantitative, but also qualitative
criteria. These criteria are mainly based on the risk grades of customers, according to the Bank's Rating Master Scale,
and on its evolution, in order to detect significant increases in Probability of Default (PD), complemented by other
information regarding the customers’ behaviour towards the financial system.

2022 REPORT & ACCOUNTS |

| 205
C1.5.4.Definition of financial assets in default and impaired
All customers who meet at least one of the following conditions are marked as default and, consequently, in NPE:
a) Delay over 90 days of material payment:
- Amounts of principal, interest or fees not paid on the due date that, cumulatively, represent:
i) more than Euros 100 (retail) or more than Euros 500 (non-retail); and,
ii) more than 1% of the total debt (direct liabilities).
After these two conditions are met, the counting of days of delay begins: if more than 90 consecutive days in which the
customer is in this situation have been counted, it is classified as default (or GR15).
The existence of a material payment delay gives rise to the default setting (GR15) of all holders of the operation (or
operations).
b) Signs of low probability of payment:
i.Credit restructuring due to financial difficulties with loss of value;
ii.Delay after restructuring due to financial difficulties;
iii.Recurrence of restructuring due to financial difficulties;
iv.Credit with signs of impairment (or stage 3 of IFRS 9);
v.Insolvency or equivalent proceedings;
vi.Litigation;
vii.Guarantees of operations in default;
viii.Credit sales with losses;
ix.Credit fraud;
x.Unpaid credit status;
xi.Breach of covenants in a credit agreement;
xii.Spread of default in an economic group;
xiii.Cross default in BCP Group.
C1.5.5.Estimates of expected credit losses - Individual analysis
1.Customers who are in one of the following conditions are subject to individual analysis:

Customers in default | Customers in litigation or insolvency, if the total exposure of the group members in these situations exceeds Euros 1 million
Customers integrated into groups with an exposure over Euros 5 million, if they have a risk grade 15
Groups or customers who are not in default | Other customers belonging to groups in the above conditions
Groups or customers with an exposure over Euros 5 million, if a group member has a risk grade 14
Groups or customers with an exposure over Euros 5 million, if a member of the group has a restructured loan and a risk grade 13
Groups or customers with an exposure over Euros 10 million, if at least one member of the group is in stage 2
Groups or customers not included in the preceding paragraphs, whose exposure exceeds Euros 25 million

2. Regardless of the criteria described in the previous point, the individual analysis is only performed for customers
with a credit exposure over Euros 500,000, while customers with exposure below this limit are not considered for
the purpose of determining the exposure referred to in the previous point.
3.Other customers that do not meet the criteria defined in 1 will also be subject to individual analysis, if under the
following conditions:
–they have impairment as a result of the latest individual analysis;
–according to recent information, they show a significant deterioration in risk levels; or,
–are a Special Purpose Vehicle (SPV).

| 2022 REPORT & ACCOUNTS

206 |
4.The individual analysis includes the following procedures:
–for customers that are not in default, the analysis of financial difficulties indicators to determine whether the
customer has objective signs of impairment, or whether it should be classified in stage 2 given the occurrence of a
significant increase in credit risk, considering for this purpose a set of predetermined signs;
–for customers in default or for which the previous analysis has allowed to conclude that the customer has objective
signs of impairment, determination of the loss.
5.The individual analysis is the responsibility of the departments in charge of customer management and of the Credit
Department, the latter in respect to the customers managed by the Commercial Networks.
The assessment of existence of impairment losses in individual terms is determined through an analysis of the total
credit exposure on a case-by-case basis. For each loan considered individually significant, the Group assessed, at each
balance sheet date, the existence of objective evidence of impairment. In the assessment of impairment losses in
individual terms, the following factors were considered:
–total exposure of each customer towards the Group and the existence of overdue loans;
–viability of the customer’s business and its capacity to generate enough cash flows to service debt obligations in the
future;
–the existence, nature and estimated value of the collaterals associated to each loan;
–significant deterioration of the customer's rating;
–the customer’s available assets in liquidation or insolvency situations;
–the existence of preferential creditors;
–the amount and expected recovery term.
6.Each of the units referred to in the previous point is responsible for assigning an expectation and a recovery period
to exposures relating to customers subject to individual analysis, which must be transmitted to the Risk Office as
part of the regular process of collecting information, accompanied by detailed justification of the proposed
impairment.
7.The expected recovery shall be represented by a recovery rate of the total outstanding exposure, which may be a
weighted rate considering the different recovery prospects for each part of the customer's liabilities.
8.The recovery estimation referred to in the previous point should be influenced by future prospects (forward-
looking), contemplating not only a more expected scenario but also alternative scenarios (an unbiased and
probability-weighted amount). The application and weighting of the scenarios should be carried out both in a
global perspective and in an individualized perspective, the latter when cases that, due to their specificity, have a
high degree of uncertainty regarding the expected recovery estimation are identified.
9.The macroeconomic adjustment set out in point 8 should be analysed annually and weighted according to the type
of recovery strategy associated with the exposure under analysis:
–for Going Concern strategies (i.e., the estimation is based on the cash flows of the business), the possibility of
applying the 2 additional macroeconomic scenarios (optimistic and pessimistic) should be analysed in a global way,
to ascertain if there is the risk of a skewed view of the expected losses from the consideration of only one scenario;
–for Gone Concern strategies (i.e., the recovery estimation is based on the realization of the collateral), the impact
of the macroeconomic scenario on collaterals should be analysed, for example, to what extent the projected real
estate index indicates significant changes ahead for the current valuation values.
10.It is the responsibility of the units referred to in point 5 to consider in their projection macroeconomic expectations
that may influence the recoverability of the debt.
11.For the purposes of the preceding paragraphs, the Economic Studies, Sustainability and Cryptoassets Department
shall disclose the macroeconomic data that allow the estimations to be made.
12.The decision to consider global impacts related to the going and gone concern scenarios should be made by the Risk
Committee, as proposed by the Risk Office.

2022 REPORT & ACCOUNTS |

| 207
13.For specific cases with a high degree of uncertainty, the allocation of alternative scenarios should be considered
casuistically. Examples of recovery situations with a degree of uncertainty include:
–recovery of collateral in geographies in which the Bank has no relevant recovery experience;
–recovery of debt related to geographies in which there is strong political instability;
–recovery of non-real estate collateral for which there is no evidence of market liquidity;
–recovery of related collateral or government guarantees in a currency other than the country's own;
–recovery of debt related to debtors for whom there is a strong negative public exposure.
14. The Risk Office is responsible for reviewing the information collected and for clarifying all identified
inconsistencies, as well as for the final decision on the customer's impairment.
15.Customers that have objective signs of impairment, but an individual impairment amount is equal to zero, are
included in the collective analysis, assuming a PD 12-month equivalent to the risk grade 12 of the Master Scale.
16.The individual impairment analysis must be carried out at least annually. In case significant signs of deterioration or
improvement in the customer’s economic and financial situation are detected, as well as the macroeconomic
conditions affecting the customer's ability to accomplish debt, it is the responsibility of the Risk Office to promote
the review of the expected impairment of this customer.
C1.5.6.Estimates of expected credit losses - Collective analysis
Transactions that are not subject to an individual impairment analysis are grouped considering their risk characteristics
and subject to a collective impairment analysis. The Group's credit portfolio is divided by internal risk grades and
according to the following segments:
a)Segments with a reduced history of defaults, designated ‘low default’: Large corporate exposures, Project finance,
Institutions (banks/financial institutions) and Sovereigns;
b)Segments not ‘low default’: - Retail: Mortgages; Overdrafts; Credit cards; Small and medium enterprises - Retail
(‘SME Retail’); and Others - Corporate: Small and medium enterprises - Corporate (‘Large SME’); and Real Estate.
The Group performs statistical tests in order to prove the homogeneity of the segments mentioned above, with a
minimum period of one year.
Expected credit losses are estimates of credit losses that are determined as follows:
–financial assets with no signs of impairment at the reporting date: the present value of the difference between the
contractual cash flows and the cash flows that the Group expects to receive;
–financial assets with impairment at the reporting date: the difference between the gross book value and the present
value of the estimated cash flows;
–unused credit commitments: the present value of the difference between the resulting contractual cash flows if the
commitment is made and the cash flows that the Group expects to receive;
–financial guarantees: the current value of the expected repayments less the amounts that the Group expects to
recover.
The main inputs used to measure ECLs on a collective basis should include the following variables:
–Probability of Default – PD;
–Loss Given Default – LGD; and,
–Exposure at Default – EAD.
These parameters are obtained through internal statistical models and other relevant historical data, considering the
already existing regulatory models adapted to the requirements of IFRS 9.

| 2022 REPORT & ACCOUNTS

208 |
PDs are estimated based on a certain historical period and will be calculated based on statistical models. These models
are based on internal data including both quantitative and qualitative factors. If there is a change in the risk of the
counterparty or exposure, the estimate of the associated PD will also vary. The PDs will be calculated considering the
contractual maturities of exposures.
The risk grades are a highly relevant input for determining the PD associated with each exposure.
The Group collects performance and default indicators about their credit risk exposures with analysis by types of
customers and products.
LGD is the magnitude of the loss that is expected to occur if an exposure goes into default. The Group estimates the
LGD parameters based on the historical recovery rates after entry into counterparty defaults. The LGD models consider
the associated collaterals, the counterparty activity sector, the default time, as well as the recovery costs. In the case
of contracts secured by real estate, it is expected that the LTV (loan-to-value) ratios are a parameter of high relevance
in the determination of LGD.
The EAD represents the expected exposure if the exposure and/or customer defaults. The Group obtains the EAD values
from the counterparty's current exposure and potential changes to its current value as a result of the contractual
conditions, including amortisations and prepayments. For commitments and financial guarantees, the value of the EAD
will consider both the amount of credit used and the expectation of future potential value that may be used in
accordance with the agreement.
As described above, except for financial assets that consider a 12-month PD as they do not present a significant
increase in credit risk, the Group will calculate the ECL value considering the risk of default during the maximum
contractual maturity period of the contract, even if, for the purpose of risk management, it is considered to be a longer
period. The maximum contractual period shall be considered as the period up to the date on which the Group has the
right to require payment or end the commitment or guarantee.
The Group adopted as a residual term criterion for renewable operations, when in stage 2, a term of 5 years. This term
was determined based on the behavioural models of this type of product applied by the Bank in the liquidity risk and
interest rate (ALM) analysis. According to these models, the maximum period of repayment of these operations is the 5
years considered conservatively in the scope of the calculation of credit impairment.
The Group uses models to forecast the evolution of the most relevant parameters for the expected credit losses,
namely probability of default, which incorporate forward-looking information. This incorporation of forward-looking
information is carried out in the relevant elements considered for the calculation of expected credit losses (ECL).
In particular, the PD point-in-time (PDpit) considered for the determination of the probability of performing exposures
at the reference date becoming defaulted exposures considers the expected values for a set of macroeconomic
variables, based on three scenarios (Central, Upside and Downside Scenario) prepared by the Bank's Economic Studies
area. These scenarios, which are used across the Bank for various purposes besides calculating impairment, consider
existing projections by reference entities.
In December 2022 the Bank carried out an update of the macroeconomic scenarios and of the corresponded adjustment
of the parameters considered in the collective impairment model.
C2.Financial liabilities
C2.1.Classification, initial recognition and subsequent measurement
At initial recognition, financial liabilities are classified in one of the following categories:
–“Financial liabilities at amortised cost”;
–“Financial liabilities at fair value through profit or loss”.

2022 REPORT & ACCOUNTS |

| 209
C2.1.1.Financial liabilities at fair value through profit or loss
Classification
Financial liabilities classified under "Financial liabilities at fair value through profit or loss" include:
a)“Financial liabilities held for trading”
In this balance the issued liabilities are classified with the purpose of repurchasing in the near term, those that form
part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a
recent actual pattern of short-term profit-taking; or is a derivative (except for a derivative classified as hedging
instrument).
b)“Financial liabilities designated at fair value through profit or loss”
The Group may irrevocably assign a financial liability at fair value through profit or loss at the time of its initial
recognition if at least one of the following conditions is met:
–the financial liability is managed, evaluated and reported internally at its fair value; or,
–the designation eliminates or significantly reduces the accounting mismatch of transactions.
Initial recognition and subsequent measurement
Considering that the transactions carried out by the Group in the normal course of its business are made in market
conditions, financial liabilities at fair value through profit or loss are initially recognised at fair value with the costs or
income associated with the transactions recognised in profit or loss at the initial moment.
Subsequent changes in the fair value of these financial liabilities are recognised as follows:
–the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of
that liability shall be presented in other comprehensive income;
–the remaining amount of change in the fair value of the liability shall be presented in profit or loss.
The accrual of interest and the premium/discount (when applicable) is recognised in "Interest expense and similar
charges" based on the effective interest rate of each transaction.
C2.1.2.Financial guarantees
If they are not designated at fair value through profit or loss at the time of initial recognition, the financial guarantee
contracts are subsequently measured at the highest of the following amounts:
–the provision for losses determined according to the criteria described in note C1.5;
–the amount initially recognised deducted, when appropriate, from the accumulated amount of income recognised
according to IFRS 15 - Revenue from contracts with customers.
Financial guarantee contracts that are not designated at fair value through profit or loss are presented under
"Provisions".
C2.1.3. Financial liabilities at amortised cost
Classification
Financial liabilities that were not classified at fair value through profit or loss, or correspond to financial guarantee
contracts, are measured at amortised cost.
The category "Financial assets at amortised cost" includes resources from credit institutions and from customers, as
well as subordinated and non-subordinated debt securities.
Initial recognition and subsequent measurement
Financial liabilities at amortised cost are initially recognised at fair value plus transaction costs and are subsequently
measured at amortised cost. Interest on financial liabilities at amortised cost are recognised in "Interest expense and
similar charges", based on the effective interest rate method.

| 2022 REPORT & ACCOUNTS

210 |
C2.2.Reclassification between categories of financial liabilities
Reclassifications of financial liabilities are not allowed.
C2.3.Derecognition of financial liabilities
The Group derecognises financial liabilities when these are cancelled or extinct.
C3.Interest recognition
Income and expense related to interest from financial instruments measured at amortised cost are recognised in
"Interest and similar income" and "Interest expense and similar charges" (net interest income) through the effective
interest rate method. Interest related to financial assets at fair value through other comprehensive income is also
recognised in net interest income.
The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected
life of the financial instrument (or, when appropriate, for a shorter period), to the net carrying amount of the financial
asset or financial liability.
For calculating the effective interest rate, the Group estimates future cash flows considering all contractual terms of
the financial instrument (e.g., early payment options) but without considering future impairment losses. The
calculation includes all fees paid or received considered as included in the effective interest rate, transaction costs and
all other premiums or discounts directly related to the transaction, except for assets and liabilities at fair value through
profit and loss.
Interest income recognised in income associated with contracts classified in stage 1 or 2 are determined by applying the
effective interest rate for each contract on its gross book value. The gross balance of a contract is its amortised cost,
before deducting the respective impairment. For financial assets included in stage 3, interest is recognised in the
income statement based on its net book value (less impairment). The interest recognition is always made in a
prospective way, i.e., for financial assets entering stage 3, interest is recognised at the amortised cost (net of
impairment) in subsequent periods.
For purchased or originated credit-impaired assets (POCI), the effective interest rate reflects the expected credit losses
in determining the expected future cash flows receivable from the financial asset.
C4.Hedge accounting
As allowed by IFRS 9, the Group opted to continue to apply the hedge accounting requirements in accordance with IAS
39.
The Group designates derivatives and other financial instruments to hedge its exposure to interest rate and foreign
exchange risk, resulting from financing and investment activities. Derivatives that do not qualify for hedge accounting
are accounted for as trading instruments.
Derivative hedging instruments are stated at fair value and gains and losses on revaluation are recognised in accordance
with the hedge accounting model adopted by the Group. A hedge relationship exists when:
–at the inception of the hedge there is formal documentation of the hedge;
–the hedge is expected to be highly effective;
–the effectiveness of the hedge can be reliably measured;
–the hedge is assessed in a continuous basis and highly effective throughout the reporting period; and,
–for hedges of a forecasted transaction, the transaction is highly probable and presents an exposure to variations in
cash flows that could ultimately affect profit or loss.
When a derivative financial instrument is used to hedge foreign exchange variations arising from monetary assets or
liabilities, no hedge accounting model is applied. Any gain or loss associated to the derivative is recognised through
profit and loss, as well as changes in currency risk of the monetary items.

2022 REPORT & ACCOUNTS |

| 211
C4.1.Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedge instruments are recognised
in profit and loss, together with changes in the fair value attributable to the hedged risk of the asset or liability or
group of assets and liabilities. If the hedge relationship no longer meets the criteria for hedge accounting, the
cumulative gains and losses due to variations of hedged risk linked to the hedge item recognised until the
discontinuance of the hedge accounting are amortised through profit and loss over the residual term of the hedged
item.
C4.2.Cash flow hedge
In a hedge relationship, the effective portion of changes in fair value of derivatives that are designated and qualify as
cash flow hedges are recognised in equity - cash flow hedge reserves in the effective part of the hedge relations. Any
gain or loss relating to the ineffective portion of the hedge is immediately recognised in profit and loss when occurred.
Amounts accumulated in equity are reclassified to profit and loss in the periods in which the hedged item will affect
profit or loss.
In case of hedging variability of cash flows, when the hedge instrument expires or is disposed or when the hedging
relationship no longer meets the criteria for hedge accounting, or when the hedge relation is revoked, the hedge
relationship is discontinued on a prospective basis. Therefore, the fair value changes of the derivative accumulated in
equity until the date of the discontinued hedge accounting can be:
–deferred over the residual period of the hedged instrument; or,
–recognised immediately in results if the hedged instrument is extinguished.
In the case of a discontinued hedge of a forecast transaction, the change in fair value of the derivative recognised in
equity at that time remains in equity until the forecasted transaction is ultimately recognised in the income statement.
When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is
immediately transferred to profit and loss.
C4.3.Hedge effectiveness
For a hedge relationship to be classified as such according to IAS 39, effectiveness must be demonstrated. As such, the
Group performs prospective tests at the beginning date of the initial hedge, if applicable, and retrospective tests in
order to demonstrate at each reporting period the effectiveness of the hedging relationships, demonstrating that the
variations in fair value of the hedging instrument are hedged by the fair value variations of the hedged item in the
portion assigned to the risk covered. Any ineffectiveness is recognised immediately in profit and loss when incurred.
C4.4.Hedge of a net investment in a foreign operation
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any exchange gain or
loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity. The gain or loss
relating to the ineffective portion is immediately recognised in profit and loss. Gains and losses accumulated in equity
related to the investment in a foreign operation and to the associated hedge operation are recognised in equity and
transferred to profit and loss, on the disposal of the foreign operation as part of the gain or loss from the disposal.
C5.Embedded Derivatives
An embedded derivative is a component of a hybrid agreement, which also includes a non-derived host instrument.
If the main instrument included in the hybrid contract is considered a financial asset, the classification and
measurement of the entire hybrid contract is carried out in accordance with the criteria described in note C1.1.3.
Derivatives embedded in contracts that are not considered financial assets are treated separately whenever the
economic risks and benefits of the derivative are not related to those of the main instrument, since the hybrid
instrument is not initially recognised at fair value through profit or loss. Embedded derivatives are recorded at fair
value with subsequent fair value changes recorded in profit or loss for the period and presented in the trading
derivatives portfolio.

| 2022 REPORT & ACCOUNTS

212 |
D.Securitization operations
D1.Traditional securitizations
As at 31 December 2022, BCP has three residential mortgage credit securitization operations (Magellan Mortgages no.1,
no.3 and no.4), portfolios which were derecognised from the Bank’s individual balance sheet, as the residual portions
of the referred operations were sold to institutional investors and, consequently, their risks and benefits were
substantially transferred.
By purchasing a part of the most subordinated residual portion, the Group maintained control of the assets and
liabilities of Magellan Mortgages no.3, with this Special Purpose Entity (SPE) being consolidated in the Group’s financial
statements, in accordance with the accounting policy referred to in note 1 B.
The three operations are traditional securitizations, where each mortgage loan portfolio was sold to a Portuguese Loan
Titularization Fund, which has financed this purchase through the sale of titularization units to a SPE with office in
Ireland. At the same time, this SPE issued and sold in capital markets a group of different portions of bonds.
D2.Synthetic securitizations
As at 31 December 2022, BCP has three synthetic securitization operations, with similar characteristics, with reference
to credit portfolios granted by the Bank mainly to Small and Medium Enterprises (SMEs).
Caravela SME no.3, which started on 28 June 2013, has a medium and long-term loan portfolio of current accounts and
authorized overdrafts.
Caravela SME no.4, initiated on 5 June 2014, has a reference portfolio of vehicle, real estate and equipment leasing.
Caravela SME no.5, initiated on 20 December 2022, is supported on a credit portfolio of medium and long term loans,
leasing contracts and commercial paper programmes.
In any of these operations, the Bank contracted a Credit Default Swap (CDS) from a Special Purpose Entity (SPE),
buying, this way, protection over the total referenced portfolio. As in all synthetic securitizations, under CDS, the risk
of the respective portfolios was divided in 3 tranches: senior, mezzanine and equity.
In the case of both Caravela no. 3 and no. 4, the mezzanine and part of the equity (20%) were placed in the market
through the issuance of Credit Linked Notes (CLNs) by the above mentioned SPE which were subscribed by investors,
while the Group retained the senior risk and the remaining part of the equity (80%). In the case of Caravela, SME no. 5,
only the full amount of the mezzanine was placed in the market, while the Group retained the risk of the full amount
of the senior and equity tranches.
Note that in all the above-mentioned synthetic transactions, the product of the CLNs issue was invested by the SPE in a
deposit, which fully collateralizes the responsibilities in the presence of its creditors including BCP in accordance with
the CDS.
In March 2022, the Group's subsidiary Bank Millennium concluded a synthetic securitization transaction with the
participation of European Investment Bank (EIB) and European Investment Fund (EIF). The portfolio covered by the
transaction concerned receivables from small and medium-sized enterprises (SME). Bank Millennium obtained the EIF
guarantee for the senior tranche and the junior tranche, which is unfunded credit protection within the meaning of the
CRR. The selected loan portfolio covered by the securitization remained in the Bank Millennium''s balance sheet.
On 23 December 2022, Bank Millennium settled another synthetic securitisation transaction executed on a portfolio of
corporate and SME receivables. The selected loan portfolio securitised remained on the bank's balance sheet. The risk
transfer was affected by a recognised credit protection instrument in the form of Credit Linked Notes (CLNs).
The transaction meets the requirements for the transfer of a material part of the risk, set out in the CRR Regulation
(Regulation of the European Parliament and of the Council No. 575/2013 of 26 June 2013 on prudential requirements
for credit institutions and investment firms).

2022 REPORT & ACCOUNTS |

| 213
E.Equity instruments
A financial instrument is an equity instrument only if: i) the instrument includes no contractual obligation to deliver
cash or another financial asset to another entity or to exchange financial assets or financial liabilities with another
entity under conditions that are potentially unfavourable to the entity; and, ii) the instrument will or may be settled in
the issuer's own equity instruments, it is either a non-derivative that includes no contractual obligation for the issuer to
deliver a variable number of its own equity instruments or a derivative that will be settled only by the issuer
exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments.
An equity instrument, independently from its legal form, evidences a residual interest in the assets of an entity after
deducting all its liabilities.
Transaction costs directly attributable to an equity instrument issuance are recognised in equity as a deduction to the
amount issued. Amounts paid or received related to sales or acquisitions of equity instruments are recognised in equity,
net of transaction costs.
Preference shares issued by the Group are considered as an equity instrument when redemption of the shares is solely
at the discretion of the Group and dividends are paid at the discretion of the Group.
Income from equity instruments (dividends) are recognised when the obligation to pay is established and are deducted
to equity.
F.Securities borrowing and repurchase agreement transactions
F1.Securities borrowing
Securities lent under securities lending arrangements continue to be recognised in the balance sheet and are measured
in accordance with the applicable accounting policy. Cash collateral received in respect of securities lent is recognised
as a financial liability. Securities borrowed under securities borrowing agreements are not recognised. Cash collateral
placements in respect of securities borrowed are recognised under loans and advances to either banks or customers.
Income and expenses arising from the securities borrowing and lending business are recognised on an accrual basis over
the period of the transactions and are included in interest income or expense (net interest income).
F2.Repurchase agreements
The Group performs acquisition/sale of securities under reselling/repurchase agreements of securities substantially
equivalent in a future date at a predetermined price ('repos'/'reverse repos'). The securities related to reselling
agreements in a future date are not recognised in the balance sheet. The amounts paid are recognised in loans and
advances to customers or loans and advances to credit institutions. The receivables are collateralised by the related
securities. Securities sold through repurchase agreements continue to be recognised in the balance sheet and are
revaluated in accordance with the applicable accounting policy. The amounts received from the proceeds of these
securities are considered as deposits from customers and deposits from credit institutions. The difference between the
acquisition/sale and reselling/repurchase conditions is recognised on an accrual basis over the period of the transaction
and is included in interest income or expenses.
G.Non-current assets held for sale and Discontinued or discontinuing operations
Non-current assets, groups of non-current assets held for sale (groups of assets together with related liabilities that
include at least a non-current asset) and discontinued operations are classified as held for sale when the intention is
to sell the referred assets and liabilities and when the referred assets or group of assets are available for immediate
sale, subject to the terms of sale usually applicable to these types of assets, and its sale is highly probable, in
accordance with IFRS 5. For the sale to be considered highly probable, the Group must be committed to a plan to sell
the asset (or disposal group) and must have initiated an active program to locate a buyer and complete the plan. In
addition, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its
current fair value. Furthermore, it should be expected that the sale qualifies for recognition as a completed sale within
one year from the date of classification, except as permitted by paragraph 9 of IFRS 5, and that the Group remains
committed to the asset sales plan and the delay is caused by events or circumstances beyond its control.

| 2022 REPORT & ACCOUNTS

214 |
The Group also classifies as non-current assets held for sale those non-current assets or groups of assets acquired
exclusively with a view to its subsequent disposal, which are available for immediate sale and its sale is highly
probable. Immediately before classification as held for sale, the measurement of the non-current assets or all assets
and liabilities in a disposal group, is performed in accordance with the applicable IFRS. After their reclassification,
these assets or disposal groups are measured at the lower of their cost and fair value less costs to sell.
Discontinued operations and the subsidiaries acquired exclusively with the purpose to sell in the short-term are
consolidated until the moment of their sale.
G1.Non-operating real estate (INAE)
The Group also classifies as non-current assets held for sale the non-operating real estate (INAE), which include
properties acquired by the Group as a result of the resolution of customer credit processes, as well as own properties
that are no longer used by the Group's services.
Properties held by real estate companies and real estate investment funds, which are part of the Group's consolidation
perimeter, whose capital or units acquired by the Group as a result of the recovery loans are treated as INAE.
At the time of acquisition, real estate classified as INAE is recognised at the lower of the value of the loans existing on
the date on which the recovery occurs, or the judicial decision is formalised, and the fair value of the property, net of
estimated costs for sale. Subsequent measurement of INAE is made at the lower of their book value and the
corresponding fair value, net of the estimated costs for their sale and are not subject to amortisation. Impairment
losses are recorded in the results of the period in which they arise.
The fair value is determined based on the market value, which is determined based on the expected sales price
obtained through periodic evaluations made by expert external evaluators accredited to the Comissão do Mercado de
Valores Mobiliários (CMVM).
The principles used to determine the net fair value of selling costs of a property apply, whenever possible, to real
estate like INAE held by Real Estate Companies and Real Estate Investment Funds for the purpose of consolidating
Group accounts.
Whenever the net fair value of the selling costs calculated for an INAE is less than the amount by which the same is
recognised in the Group's balance sheet, an impairment loss is recorded in the amount of the decrease in value
ascertained. Impairment losses are recorded against income for the year.
If the net fair value of the selling costs of an INAE, after recognition of impairment, indicates a gain, the Group may
reflect that gain up to the maximum of the impairment that has been recorded on that property.
H.Lease transactions (IFRS 16)
This standard establishes the requirements regarding the scope, classification/recognition and measurement of leases:
–from the lessor's perspective, leases will continue to be classified as finance leases or operating leases;
–from the lessee’s perspective, the standard defines a single model of accounting for lease contracts, which results
in the recognition of a right-of-use asset and a lease liability for all leases, except for those which the lease term
ends within 12 months or for those which the underlying asset is of low-value and, in these cases, the lessee may
opt for the exemption from recognition under IFRS 16 and shall recognise the lease payments associated with these
leases as an expense.
The Group chose not to apply this standard to short-term lease contracts, i.e. contracts with a term shorter than or
equal to one year, and to lease contracts in which the underlying asset’s value is below Euros 5,000. Additionally, this
standard was not applied to leases of intangible assets.

2022 REPORT & ACCOUNTS |

| 215
Lease definition
The lease definition focuses on the control of the identified asset, establishing that a contract constitutes or contains a
lease if it carries the right to control the use of an identified asset, i.e., the right to obtain substantially all the
economic benefits of using it, and the right to choose how to use the identified asset over a period in exchange of a
payment.
Impacts from the lessee’s perspective
The Group recognises for all leases, except for those with a term under 12 months or for leases of low-value assets:
–a right-of-use asset initially measured at cost must consider the Net Present Value (NPV) of the lease liability plus
the value of payments made (fixed and/or variable), deducted from any lease incentives received, penalties for
terminating the lease (if reasonably certain), as well as any cost estimates to be supported by the lessee with the
dismantling and removal of the underlying asset and/or with the recovery of its location. Subsequently, it will be
measured according to the cost model (subject to depreciations/amortisations and impairment tests);
–a lease liability initially recorded at the present value of the remaining lease payments (NPV), which includes:
–fixed payments deducted from any lease incentives receivable;
–variable lease payments that depend on a rate or an index, initially measured considering the rate or index as at
the commencement date;
–amounts expected to be paid by the lessee under residual values guarantees;
–the exercise price of a purchase option, if the lessee is reasonably certain to exercise that option;
–payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to end
the lease.
Since it is not possible to easily determine the implicit interest rate in the lease (paragraph 26 of IFRS 16), lease
payments are discounted according to the lessee’s incremental borrowing rate, which embodies the risk-free rate curve
(swap curve) plus the Group’s spread of risk, applied over the weighted average term of each lease contract. For term
contracts, that date is considered as the end of lease date, while for contracts without term, or with renewable terms,
it is assessed using the date in which the contract is enforceable, as well as eventual economic penalties associated
with the lease contract. In the evaluation of enforceability, the particular clauses of the contracts are considered, as
well as the current law on Urban Leases.
Subsequently, lease payments are measured as follows:
–by increasing their carrying amount to reflect interest;
–by reducing their carrying amount to reflect lease payments;
–carrying amount shall be remeasured to reflect any leases’ revaluations or changes, as well as to reflect the review
of in -substance fixed payments and the review of the lease term.
The Group remeasures the lease liability (and makes a corresponding adjustment to the right-of-use asset) whenever:
–the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case
the lease liability is remeasured by discounting the revised lease payments using the revised discount rate;
–the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed
residual value, in which cases the liability is remeasured by discounting the revised lease payments using the initial
discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a
revised discount rate is used;
–a lease contract is modified, and the lease modification is not accounted for as a separate lease, in which case the
lease liability is remeasured by discounting the revised lease payments using the revised discount rate.

| 2022 REPORT & ACCOUNTS

216 |
The Group did not make any adjustment during the periods presented.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If the
lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to
exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset.
The depreciation starts at the commencement date of the lease.
The implementation of this standard implies changes in the Group’s financial statements, namely:
–in the consolidated income statement:
(i)recording in “Interest Income” the interest expenses related to lease liabilities;
(ii)recording in “Other administrative costs” the amounts related to short-term lease contracts and to lease
contracts of low-value assets; and,
(iii)recording in “Amortisations and depreciations” the depreciation expenses related to right-to-use assets.
–.in the consolidated balance sheet:
(i)recording in “Financial assets at amortised cost – Loans and advances to customers” the recognition of financial
assets related to sublease operations measured accordingly to IFRS 9;
(ii)recording in “Other tangible assets” the recognition of right-to-use assets; and,
(iii)recording in “Other liabilities” the amount of recognised lease liabilities.
–in the consolidated statement of cash flows, the balance “Cash flows arising from operating activities – Payments
(cash) to suppliers and employees” includes amounts related to short-term lease contracts and to lease contracts of
low-value assets, and the balance “Cash flows arising from financing activities - Decrease in other sundry liabilities
and non-controlling interests” includes amounts related to payments of lease liabilities’ capital portions, as detailed
in the consolidated statement of cash flows.
Impact from the lessor’s perspective
In accordance with IFRS 16, paragraph 62, lessors shall classify leases as finance or operational leases.
A lease is classified as a finance lease if it transfers substantially all the risks and rewards inherent to ownership of an
underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards
inherent to ownership of an underlying asset.
Subleases
A sublease implies that the lessee establishes a lease contract with a third party, which acts as an intermediary, and
the lease contract with the original lessor is kept in force.
IFRS 16 – Leases requires that the lessor evaluates subleases regarding right-to-use and not regarding the underlying
asset.
The sublease’s lessor, simultaneously lessee regarding the original lease, shall recognise an asset in the financial
statement – a right-to-use related to the initial lease (if the lease is classified as operating) or a financial asset,
measured according to IFRS 9, related to the sublease (if the lease is classified as financing).
In case the primary lease is short-term, then the sublease should be classified as an operating lease.
Impact of the pandemic caused by COVID-19 virus
On 12 October 2020, the European Union published an amendment to IFRS 16, associated with income concessions
related to COVID-19. This amendment allows tenants, as a practical expedient, to have the possibility to choose not to
consider a rent concession that occurs as a direct consequence of the COVID-19 pandemic as a modification of the
lease. A lessee who uses this option must account for any concession that occurs at the rent level in the same way that
he would do it under IFRS 16 – Leases, if this change did not constitute a modification of the lease. This amendment
does not affect lessors.
Within the scope of the sublease, the Group carried out the analysis of the respective contracts.

2022 REPORT & ACCOUNTS |

| 217
I.Recognition of income from services and commissions
In accordance with IFRS 15, the Bank recognizes revenue associated with services and commissions when (or as) a
performance obligation is satisfied when transferring a service, based on the transaction price associated with this
performance obligation. In this context, the Bank takes the following steps to recognize revenue associated with
services and commissions:
- Recognition (satisfaction of the performance obligation): (i) identification of the contract associated with the service
provided and whether it should be covered by IFRS 15; (ii) identification of performance obligations associated with
each contract; (iii) definition of the criteria for the fulfilment of performance obligations, also considering the
contractual terms established with the counterparty. According to this definition, a service is transferred when the
customer obtains the benefits and control associated with the service provided. In this context, the Bank also identifies
whether performance obligations are met over time (“over time”) or at an exact moment (“point in time”), with
revenue being recognized accordingly.
- Measurement (price to be recognized associated with each performance obligation): (i) determine the transaction
price associated with the service provided, considering the contractual terms established with the counterparty and its
usual commercial practices. The transaction price is the amount of consideration to which the Bank expects to be
entitled in exchange for transferring promised services to the customer, excluding amounts collected on behalf of third
parties. The Bank includes in the transaction price part or all of the estimated amount of the variable consideration
associated with a performance obligation, only to the extent that it is highly probable that a significant reversal in the
amount of the accrued revenue recognized will not occur when the uncertainty associated with that variable
consideration is subsequently resolved; and (ii) allocate the transaction price to each of the performance obligations
identified under the contract established with the customer.
It should be noted that when services or commissions are an integral part of the effective interest rate of a financial
instrument, income resulting from services and commissions is recorded in net interest income (Note C.3).
J.Gains/(losses) on financial operations at fair value through profit or loss, Foreign exchange
gains/(losses), Hedge accounting gains/(losses), Gains/(losses) from derecognition of assets
and liabilities at amortised cost and Gains/(losses) from derecognition of financial assets at
fair value through other comprehensive income
These balances include gains and losses on financial assets and liabilities at fair value through profit and loss, i.e., fair
value changes and interest on trading derivatives and embedded derivatives, as well as the corresponding dividends
received. This balance also includes the gains and losses on sale of financial assets at fair value through other
comprehensive income and financial assets and financial liabilities at amortised cost. The changes in fair value of
hedging derivatives and hedged items, when fair value hedge is applicable, are also recognised in this balance, as well
as the foreign exchange gains or losses.
K.Fiduciary activities
Assets held in the scope of fiduciary activities are not recognised in the Group’s consolidated financial statements. Fees
and commissions arising from this activity are recognised in the income statement in the period in which they occur.
L.Other tangible assets
Other tangible assets are stated at acquisition cost less accumulated depreciation and impairment losses. Subsequent
costs are recognised as a separate asset only when it is probable that future economic benefits will result for the
Group. All other repairs and maintenance expenses are charged to the income statement during the financial period in
which they are incurred, under the principle of accrual-based accounting.

| 2022 REPORT & ACCOUNTS

218 |
Depreciation is calculated on a straight-line basis, over the following periods which correspond to their estimated
useful life:

| Number of years
Buildings | 50
Expenditure on freehold and leasehold buildings | 10
Equipment | 4 to 12
Other tangible assets | 3

Whenever there is an indication that a fixed tangible asset might be impaired, its recoverable amount is estimated and
an impairment loss shall be recognised if the net value of the asset exceeds its recoverable amount. The recoverable
amount is determined as the highest between the fair value less costs to sell and its value in use calculated based on
the present value of future cash flows estimated to be obtained from the continued use of the asset and its sale at the
end of the useful life. The impairment losses of the fixed tangible assets are recognised in the income statement of the
period.
M.Investment properties
Real estate properties owned by the Group are recognised as ‘Investment properties’ considering that the main
objective of these buildings is their capital appreciation on a long-term basis and not their sale in a short-term period,
nor their maintenance for own use.
These investments are initially recognised at their acquisition cost, including transaction costs, and subsequently
revaluated at their fair value. The fair value of investment properties should reflect the market conditions at the
balance sheet date. Changes in fair value are recognised in the income statement, as "Other operating income/
(losses)" (note 6).
The experts responsible for the valuation of the assets are properly certified for that purpose, being registered in
CMVM.
N.Intangible assets
N1.Research and development expenditure
The Group does not capitalise any research and development costs. All expenses are recognised as costs in the period in
which they occur.
N2.Software
The Group recognises as intangible assets the costs associated to software acquired from external entities and
depreciates them on a straight-line basis by an estimated lifetime of 6 years. The Group does not capitalise internal
costs arising from software development.
O.Cash and cash equivalents
For the purposes of the cash flow statement, the item “Cash and cash equivalents” comprises balances with less than
three months maturity from the balance sheet date, where the items "Cash and deposits at Central Banks" and "Loans
and advances to credit institutions" are included.
P.Offsetting
Financial assets and liabilities are offset and recognised at their net book value when: i) the Group has a legal right to
offset the amounts recognised and transactions can be settled at their net value; and, ii) the Group intends to settle on
a net basis or realize the asset and settle the liability simultaneously. Considering the current operations of the Group,
no compensation of material amount is made. In case of reclassification of comparative amounts, the provisions of IAS
1.41 are disclosed: i) the nature of the reclassification; ii) the amount of each item (or class of items) reclassified; and,
iii) the reason for the reclassification.

2022 REPORT & ACCOUNTS |

| 219
Q.Foreign currency transactions
Transactions in foreign currencies are converted into the respective functional currency of the operation at the foreign
exchange rate on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
converted into the respective functional currency of the operation at the foreign exchange rate on the reporting date.
Foreign exchange differences arising from conversion are recognised in the income statement. Non-monetary assets and
liabilities denominated in foreign currencies, which are stated at historical cost, are converted into the respective
functional currency of the operation at the foreign exchange rate on the date of the transaction. Non-monetary assets
and liabilities denominated in foreign currencies that are stated at fair value are converted into the respective
functional currency of the operation at the foreign exchange rate on the date that the fair value was determined
against profit and loss, except for financial assets at fair value through other comprehensive income, for which the
difference is recognised against equity.
R.Employee benefits
R1.Defined benefit plans
The Group has the responsibility to pay its employees' retirement pensions, invalidity pensions and survivor’s pensions
for their death, in accordance with the terms of the two collective labour agreements approved. These benefits are
provided for in the pension plans ‘Plano ACT’ and ‘Plano ACTQ’ of the Banco Comercial Português Group Pension Fund.
Following the publication of Decree-Law no. 54/2009, of 2 March, banking entities are obligatorily enrolling new
employees in the General Social Security System (RGSS). These employees have the RGSS as their basic retirement
scheme, and do not have any benefits under the ACT (base plan). Under the scope of its management and human
resources, the Group had already adopted as a rule the inclusion of new employees in the RGSS since July 2005.
However, until the transposition into the ACT of the alterations resulting from the referred Decree-Law no. 54/2009, all
employees were covered by the provisions of the social security chapter of the ACT, and for employees who were
already registered with the RGSS, the ACT benefit worked as a complement to the RGSS. As of 1 July 2009, in
accordance with the ACT, all new employees only have the RGSS as their basic social security scheme.
Until 2011, in addition to the benefits provided for in the two plans above-mentioned, the Group had assumed the
responsibility, if certain conditions of profitability were verified in each year, of assigning retirement supplements to
the Group's employees hired up to 21 September 2006 (Complementary Plan). The Group, at the end of 2012,
determined the extinction (cut) of the old-age benefit of the Complementary Plan. On 14 December 2012, Instituto de
Seguros de Portugal (ISP) formally approved this change to the Group’s benefit plan, effective from 1 January 2012. The
plan was cut, and employees were given individual acquired rights. On that date, the Group also proceeded to the
settlement of the respective liability.
From 1 January 2011, Bank employees were integrated in the General Social Security Scheme which now covers their
maternity, paternity, adoption and pension benefits. However, the banks remain liable for benefits that concern
illness, disability and life insurance (Decree-Law no. 1-A/2011, of 3 January).
The contributory rate is 26.6% divided between 23.6% supported by the employer and 3% supported by the employee,
replacing the Banking Social Healthcare System which was extinguished by the decree law referred above. As a
consequence of this amendment the capability to receive pensions by the actual employees are covered by the General
Social Security Scheme regime, considering the service period between 1 January 2011 and the retirement age. The
banks support the remaining difference for the total pension assured in the Collective Labour Agreement (ACT).
This integration has led to a decrease in the present value of the total benefits reported to the retirement age to be
borne by the Pension Fund, and this effect is to be recorded in accordance with the Projected Unit Credit during the
average lifetime of the pension until the normal retirement age is reached. The calculation of the liability for pensions
carried out periodically by the actuary considers this effect and is calculated considering the actuarial assumptions in
force, ensuring that the liabilities calculated with reference to 31 December 2010, not considering the effect of the
integration of bank employees into the General Social Security Scheme are fully covered and deducted from the amount
of the effect recognised until the date. The component of this effect for the year is recognised under the heading
"Current service costs".

| 2022 REPORT & ACCOUNTS

220 |
Following the approval by the Government of the Decree-Law no. 127/2011, which was published on 31 December, an
agreement was established between the Government, the Portuguese Banking Association and the Banking Labour
Unions in order to transfer, to the Social Security, the liabilities related to pensions currently being paid to pensioners
and retirees, as at 31 December 2011.
This agreement established that the responsibilities to be transferred related to the pensions in payment as at 31
December 2011 at fixed amounts (discount rate 0%) in the component established in the IRCT - Instrument of Collective
Regulation of Work of the retirees and pensioners. The responsibilities related to the increase in pensions as well as any
other complements, namely, contributions to the Health System (SAMS), death benefit and death before retirement
benefit continued to be under the responsibility of the Financial Institutions.
At the end of December 2016, a revision of the ACT was reached between the BCP Group and four unions from the two
union federations of the unions that represent the Group's employees, which introduced changes in the Social Security
clause and consequently in the pension plan financed by the BCP Group Pension Fund. The new ACT was published by
the Ministry of Labour in the Bulletin of Labour and Employment on 15 February 2017 and the effects were recorded in
the financial statements of 31 December 2016, for employees associated with these four unions.
The negotiation with Sindicato dos Bancários do Norte (SBN), which was also involved in the negotiations of the new
ACT, was concluded in April 2017 with the publication of the Bulletin of Labour and Employment, with the effects of
this new ACT recorded in the financial statements as at 31 December 2017, for employees associates of SBN.
The most relevant changes in the ACT were the change in the retirement age (presumed disability) from 65 years to 66
years and two months in 2016 and the subsequent update of an additional month in each year, which cannot, in any
case, be higher than the one in force at any moment in the General Regime of Social Security, the change in the
formula for determining the employer's contribution to SAMS and, lastly, the introduction of a new benefit called the
End of Career Premium, which replaces the Seniority Premium.
These changes were framed by the Group as a change to the pension plan under the terms of IAS 19, as such had an
impact on the present value of the liabilities with services rendered and were recognised in the income statement for
the year under "Staff costs".
In 2017, after the authorization of the Autoridade de Supervisão de Seguros e Fundos de Pensões (ASF - Portuguese
Insurance and Pension Funds Supervision Authority), the BCP Group's pension fund agreement was amended. The main
purpose of the process was to incorporate into the pension fund the changes introduced in the Group's ACT in terms of
retirement benefits, as well as to transfer to the pension fund the responsibilities that were directly chargeable to the
company (extra-fund liabilities). The pension fund has a part exclusively for the financing of these liabilities which, in
the scope of the fund, is called Additional Complement. The End of Career Premium also became the responsibility of
the pension fund under the basic pension plan.
The Group’s net obligation in respect of pension plans (defined benefit pensions plan) is calculated on a half year basis
on 31 December and 30 June of each year, and whenever there are significant market fluctuations or significant
specific events, such as changes in the plan, curtailments or settlements since the last estimation. The responsibilities
with past service are calculated using the Projected Unit Credit method and actuarial assumptions considered
adequate.
Pension liabilities are calculated by the responsible actuary, who is certified by the ASF.
The Group’s net obligation in respect of defined benefit pension plans and other benefits is calculated separately for
each plan by estimating the amount of future benefit that employees have earned in return for their service in the
current and prior periods. The benefit is discounted to determine its present value, using a discount rate determined by
reference to interest rates of high- quality corporate bonds that have maturity dates approximating the terms of the
Group’s obligations. The net obligations are determined after the deduction of the fair value of the Pension Plan's
assets.

2022 REPORT & ACCOUNTS |

| 221
The income/cost of interest with the pension plan is calculated by the Group, multiplying the net asset/liability with
retirement pension (liabilities less the fair value of the plan's assets) by the discount rate used in the determination of
the retirement pension liabilities. On this basis, the income/cost net of interest includes the interest costs associated
with retirement pension liabilities and the expected return of the plan's assets, both measured based on the discount
rate used to calculate the liabilities.
Gains and losses from the re-measurement, namely (i) actuarial gains and losses resulting from differences between
actuarial assumptions used and the amounts actually observed (experienced gains and losses) and changes in actuarial
assumptions and (ii) gains and losses arising from the difference between the expected return of the plan's assets and
the amounts obtained, are recognised against equity under "Other comprehensive income".
The Group recognises in its income statement a net total amount that comprises (i) the current service cost, (ii) the
income/cost net of interest with the pension plan, (iii) the effect of early retirement, (iv) past service costs and, (v)
the effects of any settlement or curtailment occurred during the period. The net income/cost with the pension plan is
recognised as interest and similar income or interest expense and similar costs depending on their nature. The costs of
early retirements correspond to the increase in liabilities due to the employee's retirement before reaching the age of
retirement.
Employee benefits, other than pension plans, namely post-retirement health care benefits and benefits for the spouse
and descendants for death before retirement are also included in the benefit plan calculation.
The contributions to the funds are made annually by each company of the Group, according to a specific contribution
plan that ensures the solvency of the fund. In the end of each year, according to Bank of Portugal Notice no. 12/2001,
the minimum level required for the responsibilities funding must be 100% regarding pension payments and 95%
regarding past services of active employees.
R2.Revision of the salary tables for employees in service and pensions in payment
In 2022, negotiations continued with all the unions subscribing to the Group's Collective Labour Agreements, for the
conclusion of the full review of the respective clauses, negotiations which are still ongoing.
At the same time, negotiations took place with all the unions subscribed to the Group's Collective Labour Agreements
for the revision of the Salary Tables and other clauses of pecuniary expression relative to the years of 2021 and 2022,
having been agreed on 20 June and 1 July with all the unions subscribed to the Group's Collective Labour Agreements,
the update of the Salary Tables and the Bank's Contributions to SAMS in 2021 by 0.50%, and the increase of 0.50% of
other clauses of pecuniary expression, such as lunch subsidy, diuturnities, among others. The agreed updates took
effect on 1 January 2021, except for compensation for subsistence and travel allowances, which were updated after the
agreed updates are operational.
Regarding the revision of the Salary Tables and other clauses of pecuniary expression for 2022, it was agreed on 20 June
with the unions Mais Sindicato do Sector Financeiro, SBC – Sindicato Bancários do Centro and SBN - Sindicato dos
Trabalhadores do Sector Financeiro de Portugal, the update of Salary Tables by 1.10% up to and including level 13, and
0.70% for level 14 and beyond. An increase of 1.10% was agreed for the Bank's contributions to SAMS and other
pecuniary expression clauses, and an increase of 7.14% was agreed for the lunch subsidy, whose daily value was
increased to Euros 10.50. The agreed updates took effect on 1 January 2022, except for compensation for subsistence
and travel allowances, which were updated after the agreed updates are operational.
Regarding SNQTB – Sindicato Nacional dos Quadros e Técnicos Bancários and SIB – Sindicato Independente da Banca, an
agreement has not yet been reached on the proposal presented by the Group on 22 June, the content of which
corresponds to what was agreed with the other unions, hence the negotiations are still ongoing.
R3.Defined contribution plan
For the defined contribution plans, the responsibilities related to the benefits attributed to the Group's employees are
recognised as expenses when incurred.

| 2022 REPORT & ACCOUNTS

222 |
As at 31 December 2022, the Group has two defined contribution plans. One plan covers employees who were hired
before 1 July 2009. For this plan, called non-contributory, Group's contributions will be made annually and equal to 1%
of the annual remuneration paid to employees in the previous year. Contributions shall only be made if the following
requirements are met: (i) the Bank's ROE equals or exceeds the rate of government bonds of 10 years plus 5 percentage
points, and (ii) distributable profits or reserves exist in the accounts of Banco Comercial Português.
The other plan covers employees who have been hired after 1 July 2009. For this plan, designated contributory,
monthly contributions will be made equal to 1.5% of the monthly remuneration received by employees in the current
month, either by themselves or by the Group and employees. This contribution has a mandatory character and is
defined in the Collective Labour Agreement of the BCP Group and does not have a performance criterion.
R4.Variable remuneration paid to employees
The remuneration policy for employees includes an annual variable remuneration system for employees not covered by
commercial incentive systems, based on the performance assessment of each employee, in accordance with
quantitative and qualitative criteria, that is carried out annually. As a result of this assessment and of the annual fixed
remuneration of reference for the role performed, and provided that the Bank's minimum level of performance, as
measured by a set of quantitative indicators, is met, the amount of the variable remuneration to be attributed to each
employee is determined.
The Executive Committee is responsible, under the terms defined in the remuneration policy, for setting the respective
allocation criteria for each employee, whenever it is attributed. The variable remuneration attributed to employees is
recorded against the income statement in the period to which it relates.
R5.Share-based compensation plan
As at 31 December 2022, a variable compensation plan with BCP shares is in force for the members of the Executive
Committee and for the employees considered Key Function Holders (includes Key Management Members), resulting from
the Remuneration Policies for the members of the management and supervisory bodies and for the Employees, both
approved for the financial year of 2022 and following years, with the changes that may be approved in each financial
year, namely by the General Shareholders’ Meeting regarding the Remuneration Policy for the members of the
management and supervisory bodies, and by the Board of Directors regarding the Remuneration Policy for Employees.
Key Function Holders include Key Management Members, which are the first line directors who report directly to the
Board of Directors and the remaining employees whose professional activities have a significant impact on the Bank's
risk profile.
As defined in the Remuneration Policy for the members of the management and supervisory bodies, an annual variable
remuneration system is foreseen, for which an assessment of the performance of each member of the Executive
Committee is carried out on an annual basis based on quantitative and qualitative criteria. According to this assessment
and the annual fixed remuneration, and provided that the Bank's minimum level of performance as measured by a set
of quantitative indicators is met, the amount of the variable remuneration to be attributed to each member of the
Executive Committee is decided by the Remuneration and Welfare Board. The payment of the amount of the variable
remuneration attributed is subject to a deferral period of 5 years for 50% of its value, being 50% of its value paid in the
year following the financial year in question. The amounts related to the non-deferred and deferred portion are paid
50% in cash and 50% in BCP shares. The number of BCP shares attributed results from their valuation at a price defined
in accordance with the approved Remuneration Policy.
The Remuneration Policy for Employees foresees an annual variable remuneration system for Employees not covered by
Commercial Incentives Systems, based on the performance assessment of each employee, in accordance with
quantitative and qualitative criteria, that is carried out annually. As a result of this assessment and the fixed reference
remuneration for the function performed, and provided that the Bank's minimum level of performance in a set of
quantitative indicators is met, the value of the variable remuneration to be attributed to each Employee is decided by
the Executive Committee. For Employees considered as Key Function Holders, the payment of the amount of the
variable remuneration to be attributed to each Employee is decided by the Nominations and Remunerations Committee,
and its payment subject to a deferral period of 5 years for 40% of its value, with 60% of its value paid in the year
following the financial year in question. The amounts related to the non-deferred and deferred portion are paid 50% in
cash and 50% in BCP shares. The number of BCP shares attributed and to be attributed results from their valuation at a
price defined in accordance with the approved Remuneration Policy.
Employees considered as Key Function Holders are not covered by Commercial Incentives Systems.
For the remaining Employees not covered by Commercial Incentive Systems, the payment of the variable remuneration
amount awarded is fully paid in cash in the following year to which it relates.

2022 REPORT & ACCOUNTS |

| 223
As foreseen in the approved Remuneration Policy and in the applicable legislation, the amounts of variable
remuneration attributed to the members of the Executive Committee and to the Employees considered as Key Function
Holders are subject to reduction and reversal mechanisms, to be applied in case of verification of extremely significant
events, duly identified, in which the people covered have had a direct participation.
For the members of the Executive Committee, a long-term variable remuneration system is also foreseen, through
which these members may receive variable remuneration fully paid in BCP shares after the end of the assessment
period, from 1 January 2022 until 31 December 2025, provided that a certain level of performance is achieved in a set
of long-term objectives. The amount of the long-term variable remuneration attributed is subject to a deferral period
of 5 years for 50% of its value, being 50% of its value paid in the year following the assessment period to which it
relates. The number of BCP shares attributed results from their valuation at a price defined in accordance with the
approved Remuneration Policy.
All the shares attributed to the members of the Executive Committee and to the Key Function Holders, within the scope
of the payment of variable remuneration, including long-term, are subject to a retention period of 1 year after their
payment.
The total variable remuneration to be attributed, each year, to each member of the Executive Committee and to each
Employee considered as Key Function Holders, regarding the proportion between its amount and the annual fixed
remuneration, is limited to the limits provided in the respective Remuneration Policy.
S.Income taxes
The Group is subject to income tax in several jurisdictions. The Bank is subject, in individual terms, to the regime
established by the Corporate Income Tax Code (CIRC), the Special Regime applicable to Deferred Tax Assets approved
by Law no. 61/2014 of 26 August, to which it adhered, and individual legislation. Additionally, deferred taxes relating
to tax losses and to temporary differences between the accounting net income and the net income accepted by the Tax
Authorities for Income Taxes calculation are accounted for, whenever there is a reasonable probability that these taxes
will be paid or recovered in the future.
Income tax registered in net income for the year comprises current and deferred tax effects. Income tax is recognised
in the income statement, except when related to items recognised directly in equity, which implies its recognition in
equity. Deferred taxes arising from the revaluation of financial assets at fair value through other comprehensive income
and cash flow hedging derivatives are recognised in shareholders’ equity and are recognised after in the income
statement at the moment the profit and loss that originated the deferred taxes are recognised.
Current tax is the value that determines the taxable income for the year, using tax rates enacted or substantively
enacted by authorities at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred taxes are calculated in accordance with the liability method based on the balance sheet, considering
temporary differences, between the carrying amounts of assets and liabilities and the amounts used for taxation
purposes using the tax rates approved or substantially approved at balance sheet date and that is expected to be
applied when the temporary difference is reversed.
Deferred tax liabilities are recognised for all taxable temporary differences except for non-deductible goodwill for tax
purposes, differences arising from initial recognition of assets and liabilities that affect neither accounting nor taxable
profit and differences relating to investments in subsidiaries to the extent that probably they will not reverse in the
foreseeable future.

| 2022 REPORT & ACCOUNTS

224 |
The item “Deferred tax assets” includes amounts associated with credit impairments not accepted for tax purposes
whose credits have been written-off, according to the expectation that the use of such impairments will be deductible
for the purposes of determining taxable income for the tax periods in which the legal conditions required for their tax
deductibility are met.
Deferred tax assets are recognised when it is probable that there will be future taxable profits that absorb the
deductible temporary differences for tax purposes (including reportable tax losses).
The Group, as established in IAS 12, paragraph 74, compensates the deferred tax assets and liabilities if, and only if: (i)
it has a legally enforceable right to offset current tax assets and current tax liabilities; and, (ii) the deferred tax assets
and the deferred tax liabilities relate to income taxes released by the same Tax Authority on either the same taxable
entity.
The Group complies with the guidelines of IFRIC 23 – Uncertainty over Income Tax Treatments on the determination of
taxable profit, tax bases, tax losses to be reported, tax credits to be used and tax rates in scenarios of uncertainty
regarding the income tax treatment, not having occurred any material impact on the Bank’s financial statements
resulting from its application.
In 2016, the Bank adhered to the Special Tax Regime for Groups of Companies (RETGS) for the purposes of IRC taxation,
with BCP being the dominant entity. In the financial years of 2022 and 2021, RETGS application was maintained. In
2021, Millennium bcp Participações Sociais – Sociedade Unipessoal, Lda. and BCP África, SGPS, Lda., were included in
the group of companies covered by this regime, being now covered by the general IRC regime. The group's taxable
profit is calculated by the algebraic sum of taxable profits and individual tax losses of the companies that integrate it.
T.Segmental reporting
The Group adopted IFRS 8 – Operating Segments for the purpose of disclosing financial information by operating and
geographic segments. A business segment is a Group's component: (i) which develops business activities that can obtain
revenues or expenses; (ii) whose operating results are regularly reviewed by the management with the aim of taking
decisions about allocating resources to the segment and assess its performance; and, (iii) for which separate financial
information is available.
The Group controls its activity through the following major operating segments:
Portugal activity:
–Retail Banking, also including ActivoBank;
–Companies, Corporate and Investment Banking;
–Private Banking;
–Other.
The Other segment (Portugal activity) includes activities that are not allocated to remaining segments, namely
centralized management of financial investments, corporate activities, and insurance activity.
Foreign activity:
–Poland;
–Mozambique;
–Other.
The "Other" segment (foreign activity) includes the activity arising from the discontinued operations in Switzerland and
Cayman Islands (operation liquidated in 2022) and also the contribution of the participation in an associate in Angola. It
should be noted that, following the sale of the operation in Switzerland on 2 November 2021, the subsidiary's net
income in December 2021and the capital gain generated with the sale of the entire shareholding in Banque Privée BCP
(as well as the adjustments occurred in 2022), are reflected as income arising from discontinued operations, as
provided for in IFRS 5.

2022 REPORT & ACCOUNTS |

| 225
U.Provisions, Contingent liabilities and Contingent assets
U1.Provisions
Provisions are recognised when (i) the Group has a present obligation (legal or resulting from past practices or
published policies that imply the recognition of certain responsibilities); (ii) it is probable that a payment will be
required to settle; and, (iii) a reliable estimation can be made of the amount of the obligation.
Additionally, when fundamental reorganizations occur that have a material effect on the nature and focus of the
company's operations, and the criteria for recognition of provisions referred to above are met, provisions are
recognized for restructuring costs.
The measurement of provisions considers the principles set in IAS 37 regarding the best estimate of the expected cost,
the most likely result of current actions and considering the risks and uncertainties inherent to the process result. On
the cases that the discount effect is material, provision corresponds to the actual value of the expected future
payments, discounted at a rate that considers the associated risk of the obligation.
Provisions are reviewed at each balance sheet date and adjusted to reflect the best estimate, being reverted through
profit and loss in the proportion of the payments that are not probable.
Provisions are derecognised through their use in the obligations for which they were initially created, or in the case
that these obligations cease to exist.
U2.Contingent assets
Contingent assets are not recognised in the financial statements and are disclosed when a future economic inflow of
resources is probable.
U3.Contingent liabilities
Contingent liabilities are not recognised in the financial statements, being framed under IAS 37 whenever the possibility
of an outflow of resources regarding economic benefits is not remote. The Group registers a contingent liability when:
i)it is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence
or non- occurrence of one or more uncertain future events that are not wholly within the control of the Group; or,
ii)it is a present obligation that arises from past events but is not recognised because:
a)it is not probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; or,
b)the amount of the obligation cannot be measured with sufficient reliability.
The contingent liabilities identified are subject to disclosure, unless the possibility of an outflow of resources
incorporating economic benefits is remote.
V.Earnings per share
Basic earnings per share are calculated by dividing net income attributable to shareholders of the Group by the
weighted average number of ordinary shares outstanding, excluding the average number of ordinary shares purchased
by the Group and held as treasury shares.
For the diluted earnings per share, the weighted average number of ordinary shares outstanding is adjusted to consider
conversion of all dilutive potential ordinary shares. Potential or contingent share issues are treated as dilutive when
their conversion to shares would decrease net earnings per share. If the earnings per share are changed because of an
issue with premium or discount or other event that changed the potential number of ordinary shares or because of
changes in the accounting policies, the earnings per share for all presented periods should be adjusted retrospectively.

| 2022 REPORT & ACCOUNTS

226 |
W.Insurance contracts
W1.Classification
The Group issues contracts that contain insurance risk, financial risk or a combination of both insurance and financial
risk. A contract, under which the Group accepts significant insurance risk from another party, by agreeing to
compensate that party on the occurrence of a specified uncertain future event, is classified as an insurance contract.
A contract issued by the Group without significant insurance risk, but on which financial risk is transferred with
discretionary participating features is classified as an investment contract recognised and measured in accordance with
the accounting policies applicable to insurance contracts. A contract issued by the Group that transfers only financial
risk, without discretionary participating features, is accounted for as a financial instrument.
W2.Recognition and measurement
Premiums of life insurance and investment contracts with discretionary participating features, which are considered as
long-term contracts are recognised as income when due from the policyholders. The benefits and other costs are
recognised concurrently with the recognition of income over the life of the contracts. This specialization is achieved
through the establishment of provisions/liabilities of insurance contracts and investment contracts with discretionary
participating features.
The responsibilities correspond to the present value of future benefits payable, net of administrative expenses directly
associated with the contracts, less the theoretical premiums that would be required to comply with the established
benefits and related expenses. The liabilities are determined based on assumptions of mortality, costs of management
or investment at the valuation date.
For contracts where the payment period is significantly shorter than the period of benefit, premiums are deferred and
recognised as income in proportion to the duration period of risk coverage. Regarding short-term contracts, including
contracts of non-life insurance, premiums are recorded at the time of issue. The award is recognised as income
acquired on a pro-rata basis during the term of the contract. The provision for unearned premiums represents the
amount of issued premiums on risks not occurred.
W3.Premiums
Issued gross premiums are recognised for as income in the period to which they respect independently from the
moment of payment or receivable, in accordance with the accrual accounting principle. Reinsurance premiums ceded
are accounted for as expense in the period to which they respect in the same way as gross premiums written.
W4.Provision for unearned premiums from direct insurance and reinsurance premiums ceded
The provision for unearned gross premiums is based on the evaluation of the premiums written before the end of the
year but for which the risk period continues after the year end. This provision is calculated using the pro-rata temporis
method applied to each contract in force.
W5.Liability adequacy test
At each reporting date, the Group evaluates the adequacy of liabilities arising from insurance contracts and investment
contracts with discretionary participating features. The evaluation of the adequacy of responsibilities is made based on
the projection of future cash flows associated with each contract, discounted at market interest rate without risk. This
evaluation is done product by product or aggregate of products when the risks are similar or managed jointly. Any
deficiency, if exists, is recorded in the Group's results as determined.

2022 REPORT & ACCOUNTS |

| 227
X.Insurance or reinsurance intermediation services
Banco Comercial Português and Banco ActivoBank are entities authorized by Autoridade de Supervisão de Seguros e
Fundos de Pensões (ASF) for the practice of insurance intermediation in the category of Linked Insurance Broker, in
accordance with Article 8, paragraph a), subparagraph i) of Decree-Law no. 144/2006, of 31 July, carrying out
insurance intermediation activities in life and non-life segments.
Within the scope of insurance intermediation services, these banks perform the sale of insurance contracts. As
compensation for insurance intermediation services, they receive commissions for arranging insurance contracts and
investment contracts, which are defined in agreements/protocols established with the Insurance Companies.
Commissions received for insurance intermediation are recognised in accordance with the accrual accounting principle,
so the commissions whose receipt occurs at a different time from the period to which they refer are recognised as an
amount receivable under the item "Other assets". Commissions received for insurance mediation services are recognized
in accordance with the policy described in note I. Recognition of income from services and commissions.
Y.Accounting estimates and judgments in applying accounting policies
IFRS set forth a range of accounting treatments that require the Board of Directors, under advice of the Executive
Committee, to apply judgments and to make estimations when deciding which treatment is the most appropriate.
These estimates were made considering the best information available at the date of preparation of the consolidated
financial statements, considering the context of uncertainty that results from the current economic scope. The most
significant of these accounting estimates and judgments used when applying accounting principles are discussed in this
section to improve understanding of how they affect the Group’s reported results and related disclosure.
Considering that in some cases there are several alternatives to the accounting treatment chosen by the Board of
Directors, under advice of the Executive Committee, the Group’s reported results would differ if a different treatment
was chosen. The Executive Committee believes that the choices made are appropriate and that the financial
statements present the Group’s financial position and results fairly in all material relevant aspects.
The alternative outcomes discussed below are presented solely to assist the reader in understanding the financial
statements and are not intended to suggest that other alternatives or estimations would be more appropriate.
Y1.Entities included in the consolidation perimeter
For the purposes of determining entities to include in the consolidation perimeter, the Group assesses whether it is
exposed to, or has rights to, the variable returns from its involvement with the entity and if it can take possession of
these results through the power it holds (de facto control). The decision if an entity needs to be consolidated by the
Group requires the use of judgment, estimations and assumptions to determine at what extent the Group is exposed to
the variable returns and its ability to use its power to affect these returns. Different estimations and assumptions could
lead the Group to a different scope of consolidation perimeter with a direct impact in consolidated income.
Y2.Goodwill impairment
The recoverable amount of the goodwill recorded in the Group's assets is assessed annually in the preparation of
accounts with reference to the end of the year or whenever there are indications of eventual loss of value. For this
purpose, the carrying amount of the business units of the Group for which goodwill has been recognised is compared
with the respective recoverable amount. A goodwill impairment loss is recognised when the carrying amount of the
business unit exceeds the respective recoverable amount.
In the absence of an available market value, the recoverable amount is determined using cash flows predictions,
applying a discount rate that includes a risk premium appropriated to the business unit being tested. Determining the
cash flows to discount and the discount rate, involves judgment.

| 2022 REPORT & ACCOUNTS

228 |
Y3.Income taxes
Interpretations and estimations were required to determine the total amount of income taxes in each of the
jurisdictions where the Group operates. There are many transactions and calculations for which the tax determination
is uncertain during the ordinary course of business. Different interpretations and estimations could result in a different
level of income taxes, current and deferred, recognised in the year.
This aspect assumes greater relevance for the purposes of the analysis of the recoverability of deferred taxes, in which
the Group considers projections of future taxable income based on a set of assumptions, including the estimate of
income before tax, adjustments to taxable income, evolution of tax legislation and its interpretation. Thus, the
recoverability of deferred tax assets depends on the implementation of the Bank's Board of Directors strategy, namely
the ability to generate the estimated taxable income, the evolution of tax law and its interpretation.
Regarding the activity in Portugal, Regulatory Decrees no. 5/2016, of 18 November, no. 11/2017, of 28 December, and
no. of impairment losses and other value corrections for specific credit risk deductible for the purposes of calculating
taxable income based on IRC in the years 2016, 2017 and 2018, respectively. These Regulatory Decrees establish that
Bank of Portugal Notice No. 3/95 (Notice that was relevant for the determination of loan provisions in the financial
statements presented in NCA) must be considered for the purposes of calculating the maximum limits of impairment
losses accepted for tax purposes in 2016, 2017 and 2018, respectively.
Law No. 98/2019, of September 4, established the tax regime for credit impairments and provisions for guarantees for
tax periods beginning on or after January 1, 2019, providing for approximation between accounting rules and tax for
the purposes of deductibility of expenses with the strengthening of credit impairments. The rules in force until 2018
could continue to be applied until the end of the 2023 financial year, unless the option to apply the new regime was
exercised in advance.
In calculating the taxable income for the year 2021, the maintenance of the tax rules in force until 2018 was
considered. In 2022, the Bank exercised the option to apply the new regime, under the terms of which the impairment
losses for credit risk relating to exposures analysed on an individual basis or on a collective basis recognized in
accordance with applicable accounting standards and regulations, maintaining the rules in force until 2018 for the
balance of impairment losses and other value adjustments for specific credit risk recorded up to 31 December 2021.
Following the amendments provided for in Law No. 24-D/2022, of 30 December, within the scope of the State Budget
for 2023, the time limit applicable to the carrying forward of tax losses in Portugal was eliminated. This amendment
applies to tax losses calculated in tax periods beginning on or after 1 January 2023, as well as to tax losses calculated in
tax periods prior to January 1, 2023 and whose deduction period is still in progress on that date. Thus, tax losses
calculated in 2014 and subsequent years may be deducted from future taxable income. The deduction limit for tax
losses increased from 70% to 65%, being increased by ten percentage points when the difference results from the
deduction of tax losses calculated in the 2020 and 2021 tax periods, under the terms of the special regime provided for
in Law n. 27-A/2020, of 24 July 24.
In the projections of future taxable income, namely for purposes of the analysis of the recoverability of deferred taxes
assets carried out with reference to 31 December 2022, the approximation between the accounting and tax rules
provided for in the aforementioned Law n.º 98/2019 was considered, of 4 September, taking into account the option for
applying the new regime exercised in 2022, as well as the changes in terms of the elimination of the time limit on the
use of tax losses provided for in said Law no. 24-D/2022, of 30 December.
The taxable profit or tax loss calculated by the Bank or its subsidiaries residing in Portugal can be corrected by the
Portuguese tax administration within a period of four years, except in the case of any deduction or tax credit being
used, in which the expiry period is the exercise of that right. The Bank recorded provisions or liabilities for deferred
taxes in the amount it considers appropriate to cover tax corrections or tax losses incurred, as well as contingencies
relating to years not yet reviewed by the tax authorities.

2022 REPORT & ACCOUNTS |

| 229
Y4.Non-current assets held for sale (real estate) valuation
The valuation of these assets, and consequently the impairment losses, is supported by evaluations carried out by
external experts, which incorporate several assumptions, namely the selling price per square meter, discount rate,
better use of the real estate and expectations regarding the development of real estate projects, as applicable, and
also considers the Bank's historical experience in the commercialization of real estate, its perspectives on the evolution
of the real estate market and the intentions of the management body regarding the commercialization of these assets.
The assumptions used in the valuations of these assets have an impact on their valuation and consequently on the
determination of impairment.
Y5.Pension and other employees’ benefits
Determining pension liabilities requires the use of assumptions and estimations, including the use of actuarial
projections, estimated returns on investment, and other factors, such as discount rate, pensions and salary growth
rates, mortality tables, that could impact the cost and liability of the pension plan.
As defined by IAS 19, the discount rate used to update the responsibilities of the Bank's pension fund is based on an
analysis performed over the market yields regarding a bond issues universe – that the Group considers having high
quality (low risk), different maturities (appropriate to the period of liquidation of the fund's liabilities) and
denominated in euros - related to a diverse and representative range of issuers.
Y6.Financial instruments – IFRS 9
Y6.1.Classification and measurement
The classification and measurement of financial assets depends on the results of the SPPI test (analysis of the
characteristics of the contractual cash flows to determine if they correspond only to payments of principal and interest
on the outstanding capital) and the testing of the business model.
The Group determines the business model at a level that reflects how financial asset groups are managed together to
achieve a specific business objective. This evaluation requires judgment, since the following aspects, among others,
must be considered: the way in which the performance of assets is evaluated; the risks that affect the performance of
the assets and the way these risks are managed; and how asset managers are rewarded.
The Group monitors the financial assets measured at amortised cost and at fair value through other comprehensive
income that are derecognised prior to their maturity to understand the underlying reasons for their disposal and to
determine whether they are consistent with the purpose of the business model defined for these assets. This monitoring
is part of a process of continuous evaluation by the Group of the business model of the financial assets that remain in
the portfolio, to determine if it is adequate and, if it is not, if there was a change in the business model and,
consequently, a prospective classification change of these financial assets.
Y6.2.Impairment losses on financial assets at amortised cost and debt instruments at fair value through
other comprehensive income
The determination of impairment losses on financial instruments involves judgments and estimations regarding, among
others, the following:
Significant increase in credit risk:
Impairment losses correspond to the expected losses on a 12-month for the assets in Stage 1 and the expected losses
considering the probability of a default event occurring at some point up to the maturity date of the instrument
financial assets for assets in Stages 2 and 3. An asset is classified in Stage 2 whenever there is a significant increase in
its credit risk since its initial recognition. In assessing the existence of a significant increase in credit risk, the Group
considers qualitative and quantitative information, reasonable and sustainable.

| 2022 REPORT & ACCOUNTS

230 |
In order to comply with the Supervisors' guidelines, namely regarding to the identification and measurement of credit
risk in the context of of uncertainty associated with the current geopolitical crisis, the disruption in distribution chains,
rising energy costs and inflationary pressures, the Bank proceeded to record additional impairments in relation to the
current models of collective impairment calculation (overlays).
The exercise carried out was based on an analysis of migrations from customers identified as having the highest risk for
Stage 2 and Stage 3, with the greatest impact on the corporate segment.
Definition of groups of assets with common credit risk characteristics:
When expected credit losses are measured on a collective basis, the financial instruments are grouped based on
common risk characteristics. The Group monitors the adequacy of credit risk characteristics on a regular basis to assess
whether it maintains its similarity. This procedure is necessary to ensure that, in the event of a change in the credit
risk characteristics, the asset segmentation is reviewed. This review may result in the creation of new portfolios or in
transferring assets to existing portfolios that better reflect their credit risk characteristics.
Definition of the number and relative weight of prospective information for each type of product/market and
determination of relevant prospective information:
In estimating expected credit losses, the Group uses reasonable and sustainable forecasting information that is based
on assumptions about the future evolution of different economic drivers and how each of the drivers impacts the
remaining drivers.
Probability of default:
The probability of default represents a determining factor in the measurement of expected credit losses and
corresponds to an estimation of the probability of default in each period, which is calculated based on historical data,
assumptions and expectations about future conditions.
Loss given default:
It corresponds to a loss estimation in a default scenario. It is based on the difference between the contractual cash
flows and those that the Bank expects to receive, through the cash flows generated by the customers' business or credit
collaterals. The estimation of loss given default is based on, among other aspects, the different recovery scenarios,
historical information, the costs involved in the recovery process and the estimation of the valuation of collaterals
associated with credit operations.
Y6.3.Fair value of derivative financial instruments
Fair values are based on listed market prices if available, otherwise fair value is determined either by dealer price
quotations (either for that transaction or for similar instruments traded) or by pricing models, based on net present
value of estimated future cash flows which considers the market conditions for the underlying instruments, time value,
yield curve and volatility factors. These pricing models may require assumptions or judgments in estimating their fair
values. Consequently, the use of a different model or of different assumptions or judgments in applying a particular
model could result in different results from the ones reported.
Due to market stress conditions, the Bank needed to reallocate the risk limits, especially in the sensitivity limit of the
trading portfolio and to review the stress-test scenarios and their methodologies.
In the context of the uncertainty associated with the current macroeconomic framework, the calculation of fair value
adjustments was revised considering liquidity discounts, the costs of closing positions (widening the buy and sell
spread), credit risk, spreads of financing and increased volatility.

2022 REPORT & ACCOUNTS |

| 231
Y7. Provisions for risk associated with mortgage loans indexed to the Swiss franc
The Group creates provisions for legal contingencies related to mortgage loans indexed to the Swiss franc granted by
Bank Millennium, S.A.
The assumptions used by the Bank are essentially based on historical observations and will have to be updated in
subsequent periods, which may have a relevant impact on the provision’s estimation. The methodology developed by
the Bank is based on the following parameters: (i) the number of current (including class actions) and potential future
court cases that will appear within a specified time horizon; (ii) the amount of the Bank’s potential loss in the event of
a specific court judgment (three negative judgment scenarios were taken into account); (iii) the probability of
obtaining a specific court verdict calculated on the basis of statistics of judgments of the banking sector in Poland and
legal opinions obtained; (iv) in the case of a loan agreement invalidity scenario, the Bank Millennium's loss is calculated
taking into account the assignment of a minimum probability of receiving the settlement of a remuneration for the cost
of use of capital; and (v) amicable settlement with clients in or out of court.
The evolution of responsibilities with legal contingencies related to mortgage loans indexed to the swiss franc and the
amount of the Bank’s actual losses depend, namely, on the number of ongoing and potential lawsuits, as well as on the
final court decisions about each case and amicable settlement with clients.
Z. Subsequent events
The Group analyses events occurred after the balance sheet date, i.e., favourable and/or unfavourable events that
occur between the balance sheet date and the date the financial statements were authorized for issue. In this context,
two types of events can be identified:
i)those that provide evidence of conditions that existed at the balance sheet date (events after the balance sheet
date that give rise to adjustments); and,
ii)those that are indicative of the conditions that arose after the balance sheet date (events after the balance sheet
date that do not give rise to adjustments).
Events occurred after the date of the financial statements that are not considered as adjustable events, if significant,
are disclosed in the notes to the consolidated financial statements.

| 2022 REPORT & ACCOUNTS

232 |
2.Net interest income
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Interest and similar income |  |
Interest on deposits at Central Banks and on loans and advances to credit institutions repayable on demand | 55,281 | (5,911)
Interest on financial assets at amortised cost |  |
Loans and advances to credit institutions | 74,519 | 27,399
Loans and advances to customers | 2,150,214 | 1,411,595
Debt securities | 242,165 | 131,080
Interest on financial assets at fair value through profit or loss |  |
Financial assets held for trading | 2,543 | 1,482
Financial assets not held for trading mandatorily at fair value through profit or loss | 6,109 | 12,181
Interest on financial assets at fair value through other comprehensive income | 152,066 | 74,020
Interest on hedging derivatives | 47,212 | 53,023
Interest on other assets | 7,126 | 4,255
| 2,737,235 | 1,709,124
Interest expense and similar charges |  |
Interest on financial liabilities at amortised cost |  |
Resources from credit institutions | 18,156 | 74,549
Resources from customers | (421,674) | (89,781)
Non subordinated debt securities issued | (27,703) | (19,929)
Subordinated debt | (68,546) | (57,663)
Interest on financial liabilities at fair value through profit or loss |  |
Financial liabilities held for trading |  |
Derivatives associated to financial instruments at fair value through profit or loss | (14,130) | 163
Financial liabilities at fair value through profit or loss |  |
Resources from customers | — | (1,542)
Non subordinated debt securities issued | (3,565) | (1,228)
Interest on hedging derivatives | (62,159) | (17,321)
Interest on leasing | (5,633) | (5,500)
Interest on other liabilities | (2,209) | (2,271)
| (587,463) | (120,523)
| 2,149,772 | 1,588,601

The balance Interest on deposits at Central Banks and on loans and advances to credit institutions repayable on demand
has accounted for a negative interest of Euros 6,572,000 (2021: Euros 6,737,000) associated with demand deposits with
the Bank of Portugal (do not include overnight operations).
The balance Interest on financial assets at amortised cost - Loans and advances to customers includes the amount of
Euros 55,967,000 (2021: Euros 18,008,000) related to commissions and other gains accounted for under the effective
interest method, as referred in the accounting policy described in note 1 C3. The balance also includes the amount of
Euros 76,249,000 (2021: Euros 58,881,000) related to interest income arising from customers classified in stage 3.
The balances Interest on non-subordinated debt securities issued and Interest on subordinated debt include the amount
of Euros 2,553,000 and Euros 970,000, respectively (2021: Euros 2,669,000 and Euros 5,356,000, respectively) related to
commissions and other costs accounted for under the effective interest method, as referred in the accounting policy
described in note 1 C3.

2022 REPORT & ACCOUNTS |

| 233
The balance Interest expense and similar charges - Interest on financial liabilities at amortised cost - Resources from
credit institutions has recorded in 2022 a negative cost of Euros 41,555,000 (2021: a negative cost of Euros 81,266,000)
associated with the TLTRO III operation described in note 33.
The balance Interest on leasing refers to the interest cost related to the leasing liabilities recognised under IFRS 16, as
referred in accounting policy described 1 H.
3.Dividends from equity instruments
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Dividends from financial assets held for trading | — | 6
Dividends from financial assets through other comprehensive income | 10,086 | 932
| 10,086 | 938

The balances Dividends from financial assets through other comprehensive income include in 2022 dividends from
shares of Octal Group Lda in the amount of Euros 7,950,000 and of Tiicc, Sarl in the amount of Euros 1,325,000. This
balance also includes income from investment fund units received during the year.
4.Net fees and commissions income
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Fees and commissions received |  |
Banking services provided | 484,454 | 447,002
Management and maintenance of accounts | 170,372 | 149,847
Bancassurance | 121,824 | 119,395
Securities operations | 70,775 | 67,192
Guarantees granted | 46,834 | 44,171
Commitments to third parties | 5,195 | 5,307
Management and intervention commissions | 23,624 | 22,779
Fiduciary and trust activities | 31 | —
Other commissions | 20,665 | 19,571
| 943,774 | 875,264
Fees and commissions paid |  |
Banking services provided by third parties | (132,751) | (114,476)
Securities operations | (8,991) | (8,514)
Guarantees received | (7,699) | (1,954)
Other commissions | (22,425) | (22,597)
| (171,866) | (147,541)
| 771,908 | 727,723

| 2022 REPORT & ACCOUNTS

234 |
5.Gains / (losses) on financial operations
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Gains/(losses) on financial operations at fair value through profit or loss |  |
Gains/(losses) on financial assets held for trading | (151,915) | 198,287
Gains/(losses) on financial assets not held for trading mandatorily at fair value through profit or loss | 8,962 | (6,478)
Gains/(losses) on financial assets and liabilities designated at fair value through profit or loss | 170,259 | (192,056)
| 27,306 | (247)
Foreign exchange gains/(losses) | 19,390 | 17,494
Hedge accounting gains/(losses) | (2,233) | 4,286
Gains/(losses) arising from derecognition of financial assets and liabilities at amortised cost | 18,883 | (3,717)
Gains/(losses) arising from derecognition of financial assets at fair value through other comprehensive income | (13,386) | 68,722
| 49,960 | 86,538

The balances Gains/(losses) on financial operations at fair value through profit or loss is comprised of:

| (Thousands of euros)
| 2022 | 2021
Gains/(losses) on financial assets held for trading |  |
Gains |  |
Debt securities portfolio | 7,122 | 14,990
Equity instruments | 202 | 2
Derivative financial instruments | 336,772 | 320,154
Other operations | 1,962 | 1,498
| 346,058 | 336,644
Losses |  |
Debt securities portfolio | (16,543) | (14,604)
Equity instruments | (8,062) | (628)
Derivative financial instruments | (472,534) | (122,133)
Other operations | (834) | (992)
| (497,973) | (138,357)
| (151,915) | 198,287
Gains/(losses) on financial assets not held for trading mandatorily at fair value through profit or loss |  |
Gains |  |
Loans and advances to customers | 10,280 | 37,639
Debt securities portfolio | 46,352 | 20,269
Equity instruments | 14,658 | 1,642
| 71,290 | 59,550
Losses |  |
Loans and advances to customers | (7,610) | (28,897)
Debt securities portfolio | (54,718) | (37,131)
| (62,328) | (66,028)
| 8,962 | (6,478)
|  | (continues)

2022 REPORT & ACCOUNTS |

| 235

(continuation) |  |
| (Thousands of euros)
| 2022 | 2021
Gains/(losses) on financial assets and liabilities designated at fair value through profit or loss |  |
Gains |  |
Resources from customers | 3,936 | 176
Debt securities issued |  |
Certificates and structured securities issued | 142,982 | —
Other debt securities issued | 25,993 | 3,697
| 172,911 | 3,873
Losses |  |
Debt securities issued |  |
Certificates and structured securities issued | — | (193,488)
Other debt securities issued | (2,652) | (2,441)
| (2,652) | (195,929)
| 170,259 | (192,056)

The balances Gains / (losses) on financial assets and liabilities designated at fair value through profit or loss - Gains/
(Losses) - Certificates and structured securities issued record the valuations and devaluations of certificates issued by
the Group. These liabilities are covered by futures, which valuation and devaluation are recorded in Gains / (losses) on
financial assets held for trading - Gains/(Losses) - Derivative financial instruments.
The balances Foreign exchange gains/(losses), Gains/(losses) on hedge accounting and Gains/(losses) arising from
derecognition of financial assets and liabilities at amortised cost, are presented as follows:

| (Thousands of euros)
| 2022 | 2021
Foreign exchange gains/(losses) |  |
Gains | 2,637,014 | 1,796,161
Losses | (2,617,624) | (1,778,667)
| 19,390 | 17,494
Gains/(losses) on hedge accounting |  |
Gains |  |
Hedging derivatives | 1,303,985 | 250,207
Hedged items | 199,940 | 10,684
| 1,503,925 | 260,891
Losses |  |
Hedging derivatives | (376,843) | (105,124)
Hedged items | (1,129,315) | (151,481)
| (1,506,158) | (256,605)
| (2,233) | 4,286
Gains/(losses) arising from derecognition of financial assets and liabilities at amortised cost |  |
Gains |  |
Credit sales | 13,040 | 828
Debt securities portfolio | 10,466 | —
Debt securities issued | 1,224 | 638
Others | 933 | 300
| 25,663 | 1,766
Losses |  |
Credit sales | (4,683) | (4,384)
Debt securities issued | (630) | (151)
Others | (1,467) | (948)
| (6,780) | (5,483)
| 18,883 | (3,717)

| 2022 REPORT & ACCOUNTS

236 |
The balance Gains/(losses) arising from derecognition of financial assets at fair value through other comprehensive
income is comprised of:

| (Thousands of euros)
| 2022 | 2021
Gains/(losses) arising from derecognition of financial assets at fair value through other comprehensive income |  |
Gains |  |
Debt securities portfolio | 40,019 | 73,225
Losses |  |
Debt securities portfolio | (53,405) | (4,503)
| (13,386) | 68,722

The balance Gains/(losses) arising from derecognition of financial assets at fair value through other comprehensive
income Gains - Debt securities portfolio includes the amount of Euros 479,000 (2021: Euros 38,895,000) related to gains
resulting from the sale of Portuguese Treasury bonds.
The balance Gains/(losses) on hedge accounting includes a net gain of Euros 114,278,000 (2021: Euros 4,748,000)
regarding the sale of financial assets at fair value through other comprehensive income subject to hedge accounting,
which are offset in the balance Gains/(losses) arising from derecognition of financial assets at fair value through other
comprehensive income.
6.Other operating income / (losses)
The amount of this account is comprised of

| (Thousands of euros)
| 2022 | 2021
Operating income |  |
Gains on leasing operations | 3,266 | 5,764
Income from services provided | 28,614 | 29,290
Rents | 4,053 | 3,679
Sales of cheques and others | 9,730 | 9,838
Other operating income | 50,125 | 61,831
| 95,788 | 110,402
Operating costs |  |
Donations and contributions | (4,435) | (4,576)
Contribution to the banking sector | (43,484) | (39,286)
Contributions to Resolution Funds | (36,489) | (27,615)
Contribution to the Single Resolution Fund | (25,847) | (20,886)
Contributions to the Deposit Guarantee Fund | (8,805) | (15,398)
Institutional protection scheme (Poland) | (58,972) | —
Special tax on the Polish banking sector | (36,107) | (68,520)
Taxes | (18,137) | (15,585)
Losses on financial leasing operations | (37) | (84)
Other operating costs | (56,587) | (47,357)
| (288,900) | (239,307)
| (193,112) | (128,905)

2022 REPORT & ACCOUNTS |

| 237
The balance Contribution to the banking sector in Portugal is estimated according to the terms of the Decree-Law no.
55-A/2010. The determination of the amount payable is based on: (i) the annual average liabilities deducted by core
capital (Tier 1) and supplementary capital (Tier 2) and deposits covered by the Deposit Guarantee Fund, and (ii)
notional amount of derivatives.
The balance Contributions to Resolution Funds includes the periodic contributions that must be paid to the Portuguese
Fund, as stipulated in Decree-Law No 24/2013. The periodic contributions are determined by a base rate, established
by the Bank of Portugal through regulatory instruments, to be applied in each year and which may be adjusted to the
credit institution’s risk profile based on the objective incidence of those contributions. The period contributions affect
the liabilities of the credit institutions members of the Fund, as per the article 10 of the referred Decree-Law,
deducted from the liability elements that are part of the core capital and supplementary and from the deposits covered
by the Deposit Guarantee Fund.
The balance Contributions to Resolution Funds also includes the mandatory contributions made by Bank Millennium, S.A
to the Bank Guarantee Fund in Poland. The current principles of financing the deposit guarantee system and resolution
in Poland, as defined in the Act of 10 June 2016 on the Bank Guarantee Fund, deposit guarantee system and forced
restructuring, and are effective from 2017.
The method of calculating contributions regarding the resolution fund of banks in Poland was defined in the Delegated
Regulation of the European Commission No. 2015/63 (amended by regulation 2016/1434), which applies directly to all
European Union countries. The contribution for a given year from each entity is calculated by BFG in accordance with
this regulation and the entity is notified by 1 May, each year.
The balance Contribution to the Single Resolution Fund (‘SRF’) corresponds to the Bank’s annual ex-ante contribution to
support the application of resolution measures at EU level. The SRF has been established by Regulation (EU) No
806/2014 (the “SRM Regulation”). The SRF is financed from ex-ante contributions paid annually at individual level by all
credit institutions within the Banking Union. Contributions to the SRF consider the annual target level as well as the
size and the risk profile of institutions.
In calculating the ex-ante contributions, the SRF applies the methodology as set out in the Commission Delegated
Regulation (EU) No 2015/63 and European Parliament and of the Council Regulation (EU) No 806/2014. The annual
contribution to the Fund is based on the institution's liabilities excluding own funds and covered deposits considering
adjustments due to derivatives and intra group liabilities and on a risk factor adjustment that depends on the risk
profile of the institution.
In accordance with Article 67(4) of SRM Regulation and in accordance with the Intergovernmental Agreement on the
transfer and mutualisation of contributions to the SRF, the ex-ante contributions are collected by national resolution
authorities and transferred to the SRF by 30 June of each year.
The Group delivered in 2022 the amount of Euros 25,847,000 to the Single Resolution Fund (2021: Euros 20,886,000).
The total value of the contribution attributable to the Group amounted to Euros 30,400,000 (2021: Euros 24,563,000)
and the Group opted to constitute an irrevocable commitment, through the constitution of a bailment for this purpose,
in the amount of Euros 4,553,000 (2021: Euros 3,677,000), not having this component been recognised as a cost, as
defined by the Single Resolution Council in accordance with the methodology set out in Delegated Regulation (EU) No
2015/63 of the Commission of 21 October 2014 and with the conditions laid down in the Implementing Regulation (EU)
2015/81 of the Council of 19 December 2014. As at 31 December 2022, the total amount of irrevocable commitments
constituted is Euros 25,506,000 (31 December 2021: Euros 20,953,000), registered in Other assets - Deposit account
applications (note 32).

| 2022 REPORT & ACCOUNTS

238 |
The balance Institutional protection scheme (Poland), corresponds to the contribution of Bank Millennium to the
recently created polish Institutional Protection Scheme.
The Management Board of the Bank Millennium S.A. received information on 7 June 2022, that the Management Boards
and Supervisory Boards of Alior Bank S.A., Bank Millennium S.A. Bank Polska Kasa Opieki S.A., BNP Paribas Bank Polska
S.A., ING Bank Śląski S.A., mBank S.A., Powszechna Kasa Oszczędności Bank Polski S.A., Santander Bank Polska S.A.
(Member Banks) had passed resolutions on consenting to submitting an application to the Polish Financial Supervision
Authority for approval and recognition of the protection scheme, the members of which are banks operating in the form
of a joint-stock company together with the draft agreement on the protection scheme, i.e. Member Bank’s
participation in the creation of the protection scheme referred to in Article 4 no.1(9a) of the Banking Law Act of 29
August 1997.
The objective of the protection scheme is to:
1. ensure liquidity and solvency of the Member Banks on the terms and conditions and to the extent set out in the
agreement on the protection scheme; and
2. support: a) the resolution procedure pursued by the Bank Guarantee Fund (BGF) for the bank being a joint-stock
company; and b) acquisition of the bank being a joint-stock company under Article 146b.1 of the Banking Law.
7.Staff costs
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Remunerations | 470,285 | 455,246
Mandatory social security charges |  |
Post-employment benefits (note 50) |  |
Service cost | (11,727) | (14,466)
Net interest cost / (income) in the liability coverage balance | (5,929) | 4,428
Cost with early retirement programs | 2,223 | 36,583
Amount transferred to the Fund resulting from acquired rights |  |
unassigned related to the Complementary Plan | (6) | (586)
| (15,439) | 25,959
Other mandatory social security charges | 104,784 | 73,183
| 89,345 | 99,142
Voluntary social security charges | 12,326 | 11,195
Other staff costs | 8,851 | 88,687
| 580,807 | 654,270

The balance Remunerations includes in 2022 the amount of Euros 5,630,000 related to the distribution of profits to
Bank's employees. In 2021, there was no distribution of profits to Bank's employees.
In November 2022, the Bank decided to award an extraordinary payment of Euros 500 to all employees without an
assigned vehicle, which amounted to Euros 2,869,000 reflected in the balance Remunerations. This measure aimed to
contribute to the mitigation of the impact of the current inflationary conjuncture on employees' income.
In 2022, the Bank accounted for in Other costs the amount of Euros 4,414,000 (2021: Euros 84,152,000), referring to
agreements already concluded with some employees whose effective departures will occur during the first half of 2023
(note 39).
This balance also included severance payments in the amount of 1,588,000 (2021: Euros 4,219,000), of which the
highest amounted to Euros 217,000 (2021: Euros 886,000).

2022 REPORT & ACCOUNTS |

| 239
The average number of employees by professional category, at service in the Group, is analysed as follows by category:

| 2022 | 2021
Portugal |  |
Top Management | 854 | 882
Intermediary Management | 1,416 | 1,508
Specific/Technical functions | 2,867 | 2,976
Other functions | 1,119 | 1,398
| 6,256 | 6,764
Abroad | 9,314 | 9,809
| 15,570 | 16,573

Remunerations
In compliance with the provisions of Article 47 of Banco de Portugal Notice no. 3/2020, quantitative information is
disclosed regarding the remuneration paid to different categories of members of governing bodies and categories of
employees provided for in Article 115 C no. 2 of the RGICS, as well as the information provided for in Article 450 g) to i)
of Regulation (EU) 2019/876 of the European Parliament and of the Council.
A. BCP Board of Directors
The fixed remuneration and social charges paid to members of the Board of Directors of Banco Comercial Português,
S.A. are analysed as follows:

|  |  | (Thousands of euros)
| Board of Directors
| Executive Committee | Non-executive directors
| 2022 | 2021 | 2022 | 2021
Fixed remuneration | 3,055 | 3,055 | 1,856 | 1,915
Variable remuneration |  |  |  |
Pecuniary | 370 | 246 | — | —
Shares | 1,322 | 172 | — | —
Deferred | 1,024 | 138 | — | —
Supplementary retirement pension | 611 | 611 | 138 | 138
Post-employment benefits | (42) | (1) | — | —
Other mandatory social security charges | 734 | 733 | 443 | 457
| 7,074 | 4,954 | 2,437 | 2,510
Number of beneficiaries | 6 | 6 | 11 | 11

Considering that the remuneration of members of the Executive Committee and Directors, with an exclusivity contract,
intends to compensate the functions that are performed in the Bank and in all other functions performed in subsidiaries
or governing bodies for which they have been designated by indication or in representation of the Bank, in the latter
case, the net amount of the remuneration annually received by each member of the Executive Committee will be
deducted from the fixed annual remuneration attributed by the Bank, ensuring that the effective payable amount
corresponds to the one approved by the Remuneration and Welfare Board.
In 2022, the amount of remuneration paid to the Executive Committee includes the amount of Euros 101,000 (2021:
Euros 108,000) supported by subsidiaries or companies whose governing bodies represent the Group's interests.
Regarding the Non-executive directors, this amount was Euros 26,000 (2021: Euros 33,000).
In 2022, it was assigned variable remuneration in accordance with the remuneration policies for the members of the
management and supervisory bodies and for employees, approved for 2021, as described in accounting policies 1 R4 and
1 R5.

| 2022 REPORT & ACCOUNTS

240 |
In 2022, the variable remuneration attributed was Euros 616,000 in cash, of which Euros 246,000 are deferred for 5
years, and 12,416,223 shares corresponding to Euros 2,567,000, of which 1,568,846 shares are deferred for 5 years, and
3,397,643 shares are deferred for 3 years.
In 2021, the deferred variable remuneration attributed to the Executive Committee related to 2020, was Euros 164,000
in cash and 807,882 BCP shares.
In 2022 the deferred variable remuneration from 2021, 2020 and 2019 attributed to the Executive Committee is related
to 2020, 2019 and 2018 years respectively, and amounts to Euros 590,000 in cash and 2,443,549 BCP shares in the
amount of Euros 434,000.
In 2021, the 2019 deferred variable remuneration paid to the Executive Committee relates to the 2018 financial year
and it includes the amount of Euros 89,000 and 347,432 BCP shares in the amount of Euros 49,000.
During 2022 and 2021, no severance payments were paid to members of the Board of Directors.
B. Key Function Holders (KFH)
In 2022, the remunerations and social security charges supported with the Group's Key Function Holders are, detailed
by segment, as follows:

|  |  |  | (Thousands of euros)
| 2022
| Retail | Corporate | Private Banking | Control functions | Others | Total
Fixed remuneration | 1,317 | 2,657 | 453 | 2,474 | 5,041 | 11,942
Variable remuneration |  |  |  |  |  |
Pecuniary | 129 | 176 | 43 | 224 | 448 | 1,020
Shares | 80 | 105 | 19 | 139 | 261 | 604
Deferred | 48 | 42 | 9 | 20 | 120 | 239
Post-employment benefits | (112) | (108) | (7) | (191) | (366) | (784)
Other mandatory social security charges | 331 | 547 | 111 | 649 | 1,209 | 2,847
| 1,793 | 3,419 | 628 | 3,315 | 6,713 | 15,868
Number of beneficiaries | 9 | 15 | 2 | 26 | 38 | 90

Arising from the application of the Remuneration Policies for Employees, approved for the financial year 2021, as
described in accounting policies 1 R4 and 1 R5, in 2022, the 90 Key Function Holders were awarded with variable
remuneration, in the amount of Euros 236,000 in cash and 1,534,941 shares deferred for 5 years, as well as 174
participation units from AF Fund deferred for 3 years.
In 2022, deferred variable remunerations were paid to KFH deferred from 2021, 2020 and 2019 years, corresponding in
cash to Euros 57,000 and shares in the amount of Euros 182,000.
In 2022, severance payments were paid to 3 KFH in the amount of Euros 255,000, of which the highest payment was
Euros 200,000.

2022 REPORT & ACCOUNTS |

| 241
In 2021, the remunerations and social security charges supported with the Group's Key Function Holders are, detailed
by segment, as follows:

|  |  |  | (Thousands of euros)
| 2021
| Retail | Corporate | Private Banking | Control functions | Others | Total
Fixed remuneration | 1,188 | 2,873 | 450 | 2,100 | 4,513 | 11,124
Variable remuneration |  |  |  |  |  |
Pecuniary | 28 | 46 | 6 | 57 | 119 | 256
Shares | 20 | 27 | 4 | 29 | 73 | 153
Deferred | 31 | 34 | 6 | 15 | 93 | 179
Post-employment benefits | (76) | (20) | 13 | (78) | (214) | (375)
Other mandatory social security charges | 292 | 741 | 109 | 530 | 1,116 | 2,788
| 1,483 | 3,701 | 588 | 2,653 | 5,700 | 14,125
Number of beneficiaries | 8 | 16 | 2 | 22 | 37 | 85

As described in accounting policies 1.R4 and 1.R5, during 2021, the 85 Key Function Holders were awarded variable
remuneration arising from the application of the Remuneration Policies for Employees, approved for the financial year
2020, which will be deferred over a period of 5 years, in the amount of Euros 229,000.
In 2021, deferred variable remuneration was paid to KFH deferred from 2020 and 2019, corresponding in cash to Euros
42,000 and shares in the amount of Euros 137,000.
In 2021, severance payments were paid to 3 KFH in the amount of Euros 1,327,000 of which the highest amounts to
Euros 886,000.
In 2022 and 2021, the remunerations and social security charges supported with the Group's Key Function Holders,
discriminated by Key management members and by members whose professional activities have significant impact in
the risk profile of the Bank (Other KFH), are as follows:

|  |  |  |  | (Thousands of euros)
| Key Function Holders
| Key management members | Other KFH | Total
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021
Fixed remuneration | 7,865 | 7,431 | 4,077 | 3,693 | 11,942 | 11,124
Variable remuneration |  |  |  |  |  |
Pecuniary | 705 | 170 | 315 | 86 | 1,020 | 256
Shares | 417 | 111 | 187 | 42 | 604 | 153
Deferred | 230 | 169 | 9 | 10 | 239 | 179
Post-employment benefits | (453) | (202) | (331) | (173) | (784) | (375)
Other mandatory social security charges | 1,934 | 1,840 | 913 | 948 | 2,847 | 2,788
| 10,698 | 9,519 | 5,170 | 4,606 | 15,868 | 14,125
Number of beneficiaries | 53 | 51 | 37 | 34 | 90 | 85

During 2022, deferred variable remunerations from 2021 and 2020 years were paid Euros 55,000 in cash to Key
management members, BCP shares and participation units from AF Fund from the years 2021, 2020 and 2019
corresponding to Euros 175,000. Relatedly to the other KFH, were paid Euros 3,000 in cash deferred from 2020 and BCP
shares and participation units from AF Fund, from the years 2020 and 2019, corresponding to Euros 7,000.
During 2022, with reference to the financial year of 2021, the Key management members were awarded with deferred
variable remuneration in the amount of Euros 236,000 and 1.534.941 shares deferred for 5 years, as well as 174
participation units from AF Fund deferred for 3 years.

| 2022 REPORT & ACCOUNTS

242 |
During 2021, deferred variable remuneration for the year 2020 was paid Euros 39,000 in cash to Key management
members, as well as shares from the years 2020 and 2019 corresponding to Euros 130,000, and it was paid to other KFH,
deferred from 2020, the value of Euros 3,000 in cash and shares from the years 2020 and 2019 corresponding to Euros
7,000.
In 2021, with reference to the financial year of 2020, Key management members were awarded variable remuneration
deferred over 5 years in the amount of Euros 212,000, and to other KFH it was awarded the amount of Euros 17,000.
In 2022 and 2021, the Group does not have key function holders with remunerations exceeding Euros 1 million.
8.Other administrative costs
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Water, electricity and fuel | 17,885 | 12,611
Credit cards and mortgage | 8,603 | 8,035
Communications | 24,296 | 21,544
Maintenance and related services | 17,651 | 14,965
Legal expenses | 4,368 | 4,535
Travel, hotel and representation costs | 5,318 | 2,754
Advisory services | 32,103 | 27,101
Training costs | 1,404 | 1,239
Information technology services | 35,277 | 43,631
Consumables | 7,554 | 6,450
Outsourcing and independent labour | 77,424 | 77,451
Advertising | 24,854 | 24,345
Rents and leases | 31,244 | 20,139
Insurance | 4,848 | 4,875
Transportation | 10,185 | 8,207
Other specialised services | 28,970 | 27,591
Other supplies and services | 20,977 | 18,699
| 352,961 | 324,172

The balance Rents and leases includes the amount of Euros 590,000 (2021: Euros 581,000) related to short-term lease
contracts and the amount of Euros 2,402.000 (2021: Euros 2,564,000) related to lease contracts of low-value assets, as
described in the accounting policy 1 H.
The balance Other specialised services includes fees for services rendered by the Statutory Auditor of the Group,
currently in functions, and by companies in its network as part of its statutory audit functions, as well as other services,
is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Auditing services |  |
Legal certification | 3,190 | 2,947
Other assurance services | 1,388 | 1,269
Other services | 310 | 594
| 4,888 | 4,810

2022 REPORT & ACCOUNTS |

| 243
9.Amortisations and depreciations
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Amortisations of intangible assets (note 30): |  |
Software | 36,168 | 34,173
Other intangible assets | 4,166 | 4,011
| 40,334 | 38,184
Depreciations of other tangible assets (note 29): |  |
Properties | 14,917 | 14,945
Equipment |  |
Computers | 16,375 | 16,606
Security equipment | 862 | 864
Installations | 3,007 | 2,726
Machinery | 1,535 | 1,294
Furniture | 2,717 | 2,781
Motor vehicles | 4,636 | 4,353
Other equipment | 1,498 | 1,497
Right-of-use |  |
Real estate | 53,365 | 53,799
Vehicles and equipment | 4 | 107
| 98,916 | 98,972
| 139,250 | 137,156

10.Results on modification
As described in note 48, during 2022 an Act on crowdfunding for business ventures and assistance to borrowers was
approved in Poland, introducing, among others, a possibility of up to 8 months of credit holidays in 2022-2023 for PLN
mortgage borrowers. It was calculated an adjustment and recognized in accordance with IFRS 9, accounted for in
Results on modification item against the reduction of the gross value of mortgage loans in PLN. The amount of the
adjustment was originally calculated as the difference between the gross value of the loan portfolio as at the
calculation date and the current value of estimated cash flows under loan agreements, considering 80% of loan
principals that would suspend the repayment instalment. As a result of the analysis of customer behaviour carried out
in December 2022, the Bank Millennium's Group adjusted the estimates of the percentage to 68%. As a result of the
above and the currently expected costs, the value of the adjustment recognized in 2022 as Results on modification
amounts to Euros 282,813,000 (PLN 1,324,208,000).
This balance also includes the amount of Euros 27,052,000 relating to contractual modifications made in accordance
with IFRS 9, namely those negotiated with customers holding foreign exchange mortgage loans (note 57).

| 2022 REPORT & ACCOUNTS

244 |
11.Impairment of financial assets at amortised cost
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Loans and advances to credit institutions (note 21) |  |
Charge for the year | 349 | 911
Reversals for the year | (673) | (27)
| (324) | 884
Loans and advances to customers (note 22) |  |
Charge for the year | 830,750 | 861,212
Reversals for the year | (506,926) | (487,084)
Recoveries of loans and interest charged-off | (20,836) | (22,938)
| 302,988 | 351,190
Debt securities (note 23) |  |
Associated to credit operations |  |
Charge for the year | 8 | 244
Reversals for the year | (2,393) | (2,533)
| (2,385) | (2,289)
Not associated to credit operations |  |
Charge for the year | 3,329 | 4,874
Reversals for the year | (2,779) | (1,826)
| 550 | 3,048
| (1,835) | 759
| 300,829 | 352,833

12.Impairment of financial assets at fair value through other comprehensive
income
The detail of this balance is comprised of:

| (Thousands of euros)
| 2022 | 2021
Impairment of financial assets at fair value through other comprehensive income (note 24) |  |
Charge for the year | 545 | 4,784
Reversals for the year | (5,568) | (158)
| (5,023) | 4,626

2022 REPORT & ACCOUNTS |

| 245
13.Impairment of other assets
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Impairment of investments in associated companies (note 26) |  |
Charge for the year | 1,435 | —
| 1,435 | —
Impairment of non-current assets held for sale (note 27) |  |
Charge for the year | 78,318 | 56,863
Reversals for the year | (1,116) | (3,683)
| 77,202 | 53,180
Impairment of goodwill of subsidiaries (note 30) |  |
Charge for the year | 102,770 | 347
| 102,770 | 347
Impairment of other assets (note 31) |  |
Charge for the year | 17,699 | 16,618
Reversals for the year | (7,047) | (9,263)
| 10,652 | 7,355
| 192,059 | 60,882

14.Other provisions
This balance is comprised of:

| (Thousands of euros)
| 2022 | 2021
Provision for guarantees and other commitments (note 39) |  |
Charge for the year | 27,864 | 44,414
Reversals for the year | (26,939) | (36,278)
| 925 | 8,136
Other provisions for liabilities and charges (note 39) |  |
Charge for the year | 569,226 | 651,156
Reversals for the year | (1,854) | (16,566)
| 567,372 | 634,590
| 568,297 | 642,726

The balance Other provisions for liabilities and charges - Charge for the year refers essentially to provisions for legal
risk accounted for by Bank Millennium, related to foreign currency-indexed mortgage loans, as described in note 57.

| 2022 REPORT & ACCOUNTS

246 |
15.Share of profit of associates accounted for using the equity method
The main contributions of the investments accounted for using the equity method are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Banco Millennium Atlântico, S.A. (note 26) |  |
Appropriation relating to the current year | 2,431 | 2,629
Appropriation relating to the previous year | (2,924) | (1,621)
Effect of the application of IAS 29: |  |
Amortization of the effect calculated until 31 December 2018 (a) | (423) | (2,388)
| (916) | (1,380)
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. | 39,811 | 38,218
Unicre - Instituição Financeira de Crédito, S.A. | 11,843 | 5,028
SIBS, S.G.P.S, S.A. | 11,687 | 11,396
Banque BCP, S.A.S. | 4,520 | 3,979
Fidelidade Moçambique - Companhia de Seguros S.A. (b) | 1,841 | —
Other companies | (64) | (304)
| 69,638 | 58,317
| 68,722 | 56,937

(a) Based on the requirements of IAS 29, Angola was considered as a high inflation economy until 31 December 2018, for the purposes
of presentation of consolidated financial statements, as described in accounting policy 1 B6. This classification is no longer applied
since 1 January 2019.
(b) current corporate designation of Seguradora Internacional de Moçambique, S.A.
16.Gains/(losses) on disposal of subsidiaries and other assets
This balance is comprised of:

| (Thousands of euros)
| 2022 | 2021
Gains /(Losses) on disposal of investments | (283) | 200
Gains /(Losses) on disposal of other assets | 10,450 | 2,370
| 10,167 | 2,570

The balance Gains /(Losses) on disposal of other assets includes essentially gains on disposal of assets held by the Group
and classified as non-current assets held for sale which corresponds to a gain of Euros 11,323,000 in 2022 (2021: gain of
Euros 4,719,000).

2022 REPORT & ACCOUNTS |

| 247
17.Net income from discontinued or discontinuing operations
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Banque Privée BCP (Suisse) S.A. |  |
Net income before taxes | — | 1,424
Taxes on net income | — | (223)
Gains arising on disposal of 100% investment held | — | 51,093
Gains on disposal of the investment held (price adjustment) | 1,765 | —
| 1,765 | 52,294
Fidelidade Moçambique - Companhia de Seguros S.A. |  |
Net income before taxes | — | 9,303
Taxes on net income | — | (2,515)
Gains arising on disposal of investment held (70%) | — | 23,736
Correction of gains on disposal of the investment held | 3,772 | —
Tax on gains arising on disposal | — | (11,937)
| 3,772 | 18,587
| 5,537 | 70,881

U nder the agreement entered between Banco Comercial Português, S.A. and Union Bancaire Privée, UBP SA regarding
the sale of the entire share capital of Banque Privée BCP (Suisse) S.A. and in accordance with the provisions of IFRS 5,
this operation was considered as discontinued in June 2021, and the impact on results presented in a separate line of
the income statement named "Net income from discontinued or discontinuing operations".
In 2022, the sale price and the corresponding gains on disposal were positively adjusted. The sale price received may
also be adjusted positively or negatively in 2023, depending on the evolution of certain parameters, as is usual in this
type of transaction, including those that may result from the variation of stocks and/or flows of assets under
management, in pre-determined dates and specified portfolios.
By the end of 2021, the Group, through its subsidiary BIM - Banco Internacional de Moçambique, S.A., sold 70% of the
investment held in Seguradora Internacional de Moçambique, S.A. (now designated Fidelidade Moçambique - Companhia
de Seguros S.A.), becoming to hold a minority stake of 22%. In accordance with the provisions of IFRS 5, this operation
was considered as discontinued and the impact on results presented in a separate line of the income statement named
"Net income from discontinued or discontinuing operations".
Possible contingencies are reflected in the sales price received, therefore, this may be adjusted positively or negatively
in the future, according to typical adjustments in these kind of transactions, including the variation of the value and/or
flows of assets under management, in pre-determined dates and for specified assets. By the end of 2022, the period
during which price adjustments could be made ended.

| 2022 REPORT & ACCOUNTS

248 |
18.Earnings per share
The earnings per share are calculated as follows:

| (Thousands of euros)
| 2022 | 2021
Continuing operations |  |
Net income from continuing operations | 124,138 | (45,889)
Non-controlling interests | 77,822 | 113,633
Appropriated net income from continuing operations | 201,960 | 67,744
Interests on perpetual subordinated bonds (Additional Tier 1) | (37,000) | (37,000)
Adjusted net income from continuing operations | 164,960 | 30,744
Discontinued or discontinuing operations (note 17) |  |
Net income from discontinued or discontinuing operations | 5,537 | 70,881
Non-controlling interests | — | (543)
Appropriated net income from discontinued or discontinuing operations | 5,537 | 70,338
Adjusted net income | 170,497 | 101,082
Average number of shares | 15,113,989,952 | 15,113,989,952
Basic earnings per share (Euros): |  |
from continuing operations | 0.011 | 0.002
from discontinued or discontinuing operations | — | 0.005
| 0.011 | 0.007
Diluted earnings per share (Euros): |  |
from continuing operations | 0.011 | 0.002
from discontinued or discontinuing operations | — | 0.005
| 0.011 | 0.007

As at 31 December 2022, the Bank's share capital amounts to Euros 3,000,000,000 (2021: Euros 4,725,000,000) and is
represented by 15,113,989,952 nominative book-entry shares without nominal value, fully subscribed and paid up. As
described in note 48, pursuant to the resolutions adopted at the General Meeting held on 20 December 2022, the Bank
registered its new share capital of 3,000,000,000 Euros, maintaining the number of nominatives, book-entry shares
without nominal value and of the voting rights.
There were not identified another dilution effects of the earnings per share as at 31 December 2022 and 2021, so the
diluted result is equivalent to the basic result.

2022 REPORT & ACCOUNTS |

| 249
19.Cash and deposits at Central Banks
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Cash | 593,033 | 601,772
Central Banks |  |
Bank of Portugal | 3,370,139 | 6,418,682
Central Banks abroad | 2,058,829 | 775,845
| 6,022,001 | 7,796,299

The balance Central Banks includes deposits at Central Banks of the countries where the Group operates to satisfy the
legal requirements to maintain a cash reserve calculated based on the value of deposits and other effective liabilities.
According to the European Central Bank System for Euro Zone, the cash reserve requirements establish the
maintenance of a deposit with the Central Bank equivalent to 1% of the average value of deposits and other liabilities,
during each reserve requirement period. The rate is different for countries outside the Euro Zone.
In addition, from the reserve counting period started on 30 October 2019, the ECB introduced the tiering regime, in
which the balance with the Central Bank in excess of the minimum cash reserves, up to an estimated maximum of 6
times of the reserves, is remunerated at the central bank's lending rate instead of the deposit rate.
20.Loans and advances to credit institutions repayable on demand
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Credit institutions in Portugal | 2,338 | 24,301
Credit institutions abroad | 112,443 | 278,860
Amounts due for collection | 98,679 | 58,625
| 213,460 | 361,786

The balance Amounts due for collection represents essentially cheques due for collection on other financial institutions.
These balances were settled in the first days of the following month.

| 2022 REPORT & ACCOUNTS

250 |
21.Loans and advances to credit institutions
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Loans and advances to Central Banks |  |
Central Banks abroad | 382,038 | 101,620
| 382,038 | 101,620
Loans and advances to credit institutions in Portugal |  |
Short-term applications | 1,001 | —
Loans | 4,222 | 18,240
Other | 1,068 | 15
| 6,291 | 18,255
Loans and advances to credit institutions abroad |  |
Term deposits | 425,152 | 176,642
Term deposits to collateralise CIRS and IRS operations (*) | 124,746 | 137,385
Other | 26,069 | 20,498
| 575,967 | 334,525
| 964,296 | 454,400
Impairment for loans and advances to credit institutions | (862) | (1,187)
| 963,434 | 453,213

(*) Under the scope of derivative financial instruments operations (IRS and CIRS) with institutional counterparties, and as defined in
the respective contracts ("Cash collateral"), these deposits are held by the counterparties and are given as collateral of the referred
operations (IRS and CIRS), whose revaluation is negative for the Group.
This balance analysed by the period to maturity, before impairment, is as follows:

| (Thousands of euros)
| 2022 | 2021
Up to 3 months | 752,913 | 428,202
3 to 6 months | 79,247 | 9,723
6 to 12 months | 132,136 | 7,164
1 to 5 years | — | 9,311
| 964,296 | 454,400

The changes occurred in impairment of Loans and advances to credit institutions are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Balance on 1 January | 1,187 | 304
Transfers | — | (1)
Impairment charge for the year (note 11) | 349 | 911
Reversals for the year (note 11) | (673) | (27)
Exchange rate differences | (1) | —
Balance at the end of the year | 862 | 1,187

2022 REPORT & ACCOUNTS |

| 251
22.Loans and advances to customers
The analysis of loans and advances to customers, by type of credit, is as follows:

| (Thousands of euros)
| 2022 | 2021
Mortgage loans | 28,658,104 | 28,544,360
Loans | 17,672,581 | 18,298,171
Finance leases | 4,176,329 | 4,155,758
Factoring operations | 3,022,248 | 2,725,080
Current account credits | 822,473 | 817,440
Overdrafts | 1,046,121 | 1,073,654
Discounted bills | 201,081 | 143,109
| 55,598,937 | 55,757,572
Overdue loans - less than 90 days | 94,063 | 127,928
Overdue loans - Over 90 days | 485,166 | 936,185
| 56,178,166 | 56,821,685
Loans impairment | (1,502,373) | (1,849,284)
| 54,675,793 | 54,972,401

The balance Loans and advances to customers, as at 31 December 2022, is analysed as follows:

|  |  |  | (Thousands of euros)
| 2022
| Outstanding loans | Overdue loans | Gross amount | Impairment | Net amount
Public sector | 583,999 | — | 583,999 | (966) | 583,033
Asset-backed loans | 32,233,382 | 123,063 | 32,356,445 | (555,500) | 31,800,945
Other guaranteed loans | 5,667,532 | 100,085 | 5,767,617 | (222,449) | 5,545,168
Unsecured loans | 7,458,312 | 258,186 | 7,716,498 | (476,885) | 7,239,613
Foreign loans | 2,457,135 | 2,451 | 2,459,586 | (34,334) | 2,425,252
Factoring operations | 3,022,248 | 16,680 | 3,038,928 | (49,411) | 2,989,517
Finance leases | 4,176,329 | 78,764 | 4,255,093 | (162,828) | 4,092,265
| 55,598,937 | 579,229 | 56,178,166 | (1,502,373) | 54,675,793

The balances Asset-backed loans and Other guaranteed loans follow the subsequent types of guarantees considered:
–Asset-backed loans: Financial collaterals, physical collaterals (movable or immovable) and amounts receivable (income
consignment);
–Credit with other guarantees: First-demand guarantees issued by banks or other entities and personal guarantees.

| 2022 REPORT & ACCOUNTS

252 |
The balance Loans and advances to customers, as at 31 December 2021, is analysed as follows:

|  |  |  | (Thousands of euros)
| 2021
| Outstanding loans | Overdue loans | Gross amount | Impairment | Net amount
Public sector | 635,424 | — | 635,424 | (1,681) | 633,743
Asset-backed loans | 32,425,246 | 528,636 | 32,953,882 | (839,830) | 32,114,052
Other guaranteed loans | 6,182,245 | 99,957 | 6,282,202 | (226,767) | 6,055,435
Unsecured loans | 7,423,516 | 347,056 | 7,770,572 | (541,446) | 7,229,126
Foreign loans | 2,210,303 | 8,497 | 2,218,800 | (30,443) | 2,188,357
Factoring operations | 2,725,080 | 11,304 | 2,736,384 | (41,967) | 2,694,417
Finance leases | 4,155,758 | 68,663 | 4,224,421 | (167,150) | 4,057,271
| 55,757,572 | 1,064,113 | 56,821,685 | (1,849,284) | 54,972,401

As at 31 December 2022, the balance Loans and advances to customers includes the amount of Euros 10,613,589,000
(31 December 2021: Euros 11,896,688,000) regarding mortgage loans assigned to the cover pool backing the Group’s
covered bond programme issuances.
As part of the liquidity risk management, the Group holds a pool of eligible assets that can serve as collateral in funding
operations with the European Central Bank and other Central Banks in countries where the Group operates, which
include loans and advances to customers.
As referred in note 51, the Group provides loans and/or guarantees to qualifying shareholders holding individually or
together with their affiliates, 5% or more of the share capital identified in the Board of Directors report and in note 41.
As at 31 December 2022, the Group granted credit to qualifying shareholders and entities controlled by them, in the
amount of Euros 98,658,000 (31 December 2021: Euros 152,056,000), as referred in note 51 a). The amount of
impairment recognised for these contracts amounts to Euros 914,000 (31 December 2021: Euros 3,140,000).
The conclusion of business between the Company and holders of qualifying holdings or individuals or legal entities
related to them in accordance with the provisions of article 33.º, n.º 3 of Notice 3/2020 of Bank of Portugal, regardless
of the amount, is always subject of consideration and deliberation by the Board of Directors, after obtaining a prior
opinion from the Audit Committee, and by proposal of the Executive Committee, which in turn deliberates under
proposal from the Credit Committee, after obtaining an analysis and opinion from the Compliance Office, which
pronounces regarding the compliance of the proposed operations with internal regulations, legal and regulatory
provisions and other conditions that may apply to them, and the Risk Office, which evaluates and issues an opinion on
the risks inherent to the operation.
As at 31 December 2022, the balance Finance leases includes the amount of Euros 348,000 (31 December 2021: Euros
6,938,000) relative to sublease operations, as referred in accounting policy 1 H.
The analysis of the outstanding amount of financial lease contracts, by type of client, is presented as follows:

| (Thousands of euros)
| 2022 | 2021
Individuals |  |
Home | 43,402 | 48,249
Consumer | 27,606 | 31,359
Others | 75,666 | 83,744
| 146,674 | 163,352
Companies |  |
Equipment | 1,890,361 | 1,889,697
Real estate | 2,139,294 | 2,102,709
| 4,029,655 | 3,992,406
| 4,176,329 | 4,155,758

2022 REPORT & ACCOUNTS |

| 253
The analysis of loans and advances to customers, as at 31 December 2022, by sector of activity, is as follows:

|  |  |  |  | (Thousands of euros)
| 2022
| Outstanding loans | Overdue loans | Gross amount | Impairment | Net amount | % Gross amount
Agriculture and forestry | 461,680 | 8,517 | 470,197 | (13,879) | 456,318 | 0.84%
Fisheries | 25,308 | 3,226 | 28,534 | (2,563) | 25,971 | 0.05%
Mining | 70,970 | 1,676 | 72,646 | (5,249) | 67,397 | 0.13%
Food, beverage and tobacco | 813,359 | 11,634 | 824,993 | (26,201) | 798,792 | 1.47%
Textiles | 497,338 | 8,989 | 506,327 | (17,109) | 489,218 | 0.90%
Wood and cork | 260,175 | 3,730 | 263,905 | (5,364) | 258,541 | 0.47%
Paper, printing and publishing | 148,937 | 742 | 149,679 | (3,924) | 145,755 | 0.27%
Chemicals | 862,826 | 38,334 | 901,160 | (63,538) | 837,622 | 1.60%
Machinery, equipment and basic metallurgical | 1,526,778 | 25,298 | 1,552,076 | (56,649) | 1,495,427 | 2.76%
Electricity and gas | 229,821 | 443 | 230,264 | (1,285) | 228,979 | 0.41%
Water | 204,736 | 452 | 205,188 | (8,371) | 196,817 | 0.37%
Construction | 1,497,114 | 21,639 | 1,518,753 | (141,991) | 1,376,762 | 2.70%
Retail business | 1,705,882 | 18,730 | 1,724,612 | (36,848) | 1,687,764 | 3.07%
Wholesale business | 2,225,903 | 26,755 | 2,252,658 | (67,081) | 2,185,577 | 4.01%
Restaurants and hotels | 1,505,963 | 15,721 | 1,521,684 | (71,192) | 1,450,492 | 2.71%
Transports | 1,320,236 | 7,464 | 1,327,700 | (20,751) | 1,306,949 | 2.36%
Post offices | 19,918 | 254 | 20,172 | (412) | 19,760 | 0.04%
Telecommunications | 411,885 | 1,508 | 413,393 | (9,411) | 403,982 | 0.74%
Services |  |  |  |  |  |
Financial intermediation | 2,047,265 | 2,149 | 2,049,414 | (44,691) | 2,004,723 | 3.65%
Real estate activities | 1,978,182 | 10,931 | 1,989,113 | (35,469) | 1,953,644 | 3.54%
Consulting, scientific and technical activities | 969,410 | 8,232 | 977,642 | (86,718) | 890,924 | 1.74%
Administrative and support services activities | 532,237 | 4,296 | 536,533 | (57,220) | 479,313 | 0.96%
Public sector | 823,904 | — | 823,904 | (2,545) | 821,359 | 1.47%
Education | 143,930 | 814 | 144,744 | (14,627) | 130,117 | 0.26%
Health and collective service activities | 378,423 | 1,029 | 379,452 | (7,108) | 372,344 | 0.68%
Artistic, sports and recreational activities | 236,543 | 2,128 | 238,671 | (37,124) | 201,547 | 0.43%
Other services | 234,399 | 2,971 | 237,370 | (101,356) | 136,014 | 0.42%
Consumer loans | 5,775,239 | 237,160 | 6,012,399 | (369,220) | 5,643,179 | 10.70%
Mortgage credit | 28,012,946 | 110,809 | 28,123,755 | (181,551) | 27,942,204 | 50.06%
Other domestic activities | 1,377 | 332 | 1,709 | (38) | 1,671 | 0%
Other international activities | 676,253 | 3,266 | 679,519 | (12,888) | 666,631 | 1.21%
| 55,598,937 | 579,229 | 56,178,166 | (1,502,373) | 54,675,793 | 100%

| 2022 REPORT & ACCOUNTS

254 |
The analysis of loans and advances to customers, as at 31 December 2021, by sector of activity, is as follows:

|  |  |  |  | (Thousands of euros)
| 2021
| Outstanding loans | Overdue loans | Gross amount | Impairment | Net amount | % Gross amount
Agriculture and forestry | 444,936 | 6,142 | 451,078 | (10,764) | 440,314 | 0.79%
Fisheries | 38,039 | 1,148 | 39,187 | (2,752) | 36,435 | 0.07%
Mining | 87,811 | 1,943 | 89,754 | (2,038) | 87,716 | 0.16%
Food, beverage and tobacco | 806,228 | 8,326 | 814,554 | (22,048) | 792,506 | 1.43%
Textiles | 528,010 | 9,436 | 537,446 | (17,959) | 519,487 | 0.95%
Wood and cork | 274,385 | 5,520 | 279,905 | (11,116) | 268,789 | 0.49%
Paper, printing and publishing | 189,495 | 605 | 190,100 | (3,799) | 186,301 | 0.34%
Chemicals | 841,454 | 25,028 | 866,482 | (44,219) | 822,263 | 1.53%
Machinery, equipment and basic metallurgical | 1,568,322 | 30,550 | 1,598,872 | (56,605) | 1,542,267 | 2.81%
Electricity and gas | 237,037 | 837 | 237,874 | (2,515) | 235,359 | 0.42%
Water | 223,210 | 352 | 223,562 | (19,330) | 204,232 | 0.39%
Construction | 1,715,141 | 36,691 | 1,751,832 | (120,633) | 1,631,199 | 3.08%
Retail business | 1,772,527 | 27,490 | 1,800,017 | (52,210) | 1,747,807 | 3.17%
Wholesale business | 2,319,324 | 34,827 | 2,354,151 | (85,691) | 2,268,460 | 4.14%
Restaurants and hotels | 1,669,080 | 16,810 | 1,685,890 | (128,012) | 1,557,878 | 2.97%
Transports | 1,349,930 | 13,804 | 1,363,734 | (37,792) | 1,325,942 | 2.40%
Post offices | 18,695 | 208 | 18,903 | (461) | 18,442 | 0.03%
Telecommunications | 437,097 | 1,773 | 438,870 | (12,275) | 426,595 | 0.77%
Services |  |  |  |  |  |
Financial intermediation | 1,886,333 | 65,780 | 1,952,113 | (118,938) | 1,833,175 | 3.44%
Real estate activities | 1,868,624 | 11,680 | 1,880,304 | (50,639) | 1,829,665 | 3.31%
Consulting, scientific and technical activities | 879,296 | 5,301 | 884,597 | (60,492) | 824,105 | 1.56%
Administrative and support services activities | 588,528 | 6,725 | 595,253 | (64,140) | 531,113 | 1.05%
Public sector | 903,437 | — | 903,437 | (2,848) | 900,589 | 1.59%
Education | 151,152 | 1,002 | 152,154 | (13,240) | 138,914 | 0.27%
Health and collective service activities | 401,740 | 1,306 | 403,046 | (15,802) | 387,244 | 0.71%
Artistic, sports and recreational activities | 347,660 | 42,689 | 390,349 | (108,601) | 281,748 | 0.69%
Other services | 229,001 | 242,691 | 471,692 | (206,320) | 265,372 | 0.83%
Consumer loans | 5,599,131 | 305,938 | 5,905,069 | (391,664) | 5,513,405 | 10.39%
Mortgage credit | 27,920,953 | 151,456 | 28,072,409 | (173,316) | 27,899,093 | 49.40%
Other domestic activities | 1,080 | 707 | 1,787 | (108) | 1,679 | 0.00%
Other international activities | 459,916 | 7,348 | 467,264 | (12,957) | 454,307 | 0.82%
| 55,757,572 | 1,064,113 | 56,821,685 | (1,849,284) | 54,972,401 | 100.00%

2022 REPORT & ACCOUNTS |

| 255
The analysis of loans and advances to customers, by maturity and by sector of activity, as at 31 December 2022, is as
follows:

|  |  |  |  | (Thousands of euros)
| 2022
| Outstanding loans |  |
| Due within 1 year | 1 year to 5 years | Over 5 years | Total Outstanding | Overdue loans | Total
Agriculture and forestry | 104,760 | 181,701 | 175,219 | 461,680 | 8,517 | 470,197
Fisheries | 3,756 | 12,465 | 9,087 | 25,308 | 3,226 | 28,534
Mining | 17,107 | 42,103 | 11,760 | 70,970 | 1,676 | 72,646
Food, beverage and tobacco | 408,663 | 307,334 | 97,362 | 813,359 | 11,634 | 824,993
Textiles | 154,019 | 265,451 | 77,868 | 497,338 | 8,989 | 506,327
Wood and cork | 92,259 | 135,429 | 32,487 | 260,175 | 3,730 | 263,905
Paper, printing and publishing | 42,397 | 76,818 | 29,722 | 148,937 | 742 | 149,679
Chemicals | 335,828 | 396,647 | 130,351 | 862,826 | 38,334 | 901,160
Machinery, equipment and basic metallurgical | 559,264 | 742,898 | 224,616 | 1,526,778 | 25,298 | 1,552,076
Electricity and gas | 55,254 | 67,104 | 107,463 | 229,821 | 443 | 230,264
Water | 35,418 | 80,638 | 88,680 | 204,736 | 452 | 205,188
Construction | 524,861 | 638,536 | 333,717 | 1,497,114 | 21,639 | 1,518,753
Retail business | 668,493 | 729,772 | 307,617 | 1,705,882 | 18,730 | 1,724,612
Wholesale business | 1,011,781 | 933,752 | 280,370 | 2,225,903 | 26,755 | 2,252,658
Restaurants and hotels | 81,252 | 523,536 | 901,175 | 1,505,963 | 15,721 | 1,521,684
Transports | 334,717 | 840,728 | 144,791 | 1,320,236 | 7,464 | 1,327,700
Post offices | 12,384 | 6,551 | 983 | 19,918 | 254 | 20,172
Telecommunications | 82,116 | 274,708 | 55,061 | 411,885 | 1,508 | 413,393
Services |  |  |  |  |  |
Financial intermediation | 194,026 | 783,252 | 1,069,987 | 2,047,265 | 2,149 | 2,049,414
Real estate activities | 345,774 | 830,401 | 802,007 | 1,978,182 | 10,931 | 1,989,113
Consulting, scientific and technical activities | 211,357 | 387,691 | 370,362 | 969,410 | 8,232 | 977,642
Administrative and support services activities | 122,350 | 278,364 | 131,523 | 532,237 | 4,296 | 536,533
Public sector | 84,965 | 283,426 | 455,513 | 823,904 | — | 823,904
Education | 29,436 | 47,613 | 66,881 | 143,930 | 814 | 144,744
Health and collective service activities | 70,100 | 167,080 | 141,243 | 378,423 | 1,029 | 379,452
Artistic, sports and recreational activities | 11,618 | 64,764 | 160,161 | 236,543 | 2,128 | 238,671
Other services | 70,922 | 121,649 | 41,828 | 234,399 | 2,971 | 237,370
Consumer loans | 1,901,816 | 2,744,264 | 1,129,159 | 5,775,239 | 237,160 | 6,012,399
Mortgage credit | 464,882 | 1,593,206 | 25,954,858 | 28,012,946 | 110,809 | 28,123,755
Other domestic activities | 247 | 477 | 653 | 1,377 | 332 | 1,709
Other international activities | 432,937 | 81,442 | 161,874 | 676,253 | 3,266 | 679,519
| 8,464,759 | 13,639,800 | 33,494,378 | 55,598,937 | 579,229 | 56,178,166

| 2022 REPORT & ACCOUNTS

256 |
The analysis of loans and advances to customers, by maturity and by sector of activity, as at 31 December 2021, is as
follows:

|  |  |  |  | (Thousands of euros)
| 2021
| Outstanding loans |  |
| Due within 1 year | 1 year to 5 years | Over 5 years | Total Outstanding | Overdue loans | Total
Agriculture and forestry | 105,704 | 161,400 | 177,832 | 444,936 | 6,142 | 451,078
Fisheries | 5,753 | 14,677 | 17,609 | 38,039 | 1,148 | 39,187
Mining | 16,303 | 58,651 | 12,857 | 87,811 | 1,943 | 89,754
Food, beverage and tobacco | 359,259 | 332,183 | 114,786 | 806,228 | 8,326 | 814,554
Textiles | 137,952 | 277,945 | 112,113 | 528,010 | 9,436 | 537,446
Wood and cork | 99,291 | 131,284 | 43,810 | 274,385 | 5,520 | 279,905
Paper, printing and publishing | 75,064 | 74,969 | 39,462 | 189,495 | 605 | 190,100
Chemicals | 267,511 | 412,437 | 161,506 | 841,454 | 25,028 | 866,482
Machinery, equipment and basic metallurgical | 521,463 | 759,272 | 287,587 | 1,568,322 | 30,550 | 1,598,872
Electricity and gas | 48,354 | 66,317 | 122,366 | 237,037 | 837 | 237,874
Water | 31,754 | 57,684 | 133,772 | 223,210 | 352 | 223,562
Construction | 510,600 | 742,757 | 461,784 | 1,715,141 | 36,691 | 1,751,832
Retail business | 668,955 | 756,484 | 347,088 | 1,772,527 | 27,490 | 1,800,017
Wholesale business | 914,425 | 1,082,909 | 321,990 | 2,319,324 | 34,827 | 2,354,151
Restaurants and hotels | 88,460 | 512,541 | 1,068,079 | 1,669,080 | 16,810 | 1,685,890
Transports | 292,026 | 692,834 | 365,070 | 1,349,930 | 13,804 | 1,363,734
Post offices | 11,885 | 5,976 | 834 | 18,695 | 208 | 18,903
Telecommunications | 87,200 | 273,315 | 76,582 | 437,097 | 1,773 | 438,870
Services |  |  |  |  |  |
Financial intermediation | 213,955 | 401,976 | 1,270,402 | 1,886,333 | 65,780 | 1,952,113
Real estate activities | 316,696 | 819,454 | 732,474 | 1,868,624 | 11,680 | 1,880,304
Consulting, scientific and technical activities | 174,787 | 312,648 | 391,861 | 879,296 | 5,301 | 884,597
Administrative and support services activities | 146,087 | 272,501 | 169,940 | 588,528 | 6,725 | 595,253
Public sector | 78,613 | 349,831 | 474,993 | 903,437 | — | 903,437
Education | 29,090 | 50,130 | 71,932 | 151,152 | 1,002 | 152,154
Health and collective service activities | 67,409 | 166,250 | 168,081 | 401,740 | 1,306 | 403,046
Artistic, sports and recreational activities | 48,141 | 54,849 | 244,670 | 347,660 | 42,689 | 390,349
Other services | 75,324 | 83,111 | 70,566 | 229,001 | 242,691 | 471,692
Consumer loans | 1,772,975 | 2,675,033 | 1,151,123 | 5,599,131 | 305,938 | 5,905,069
Mortgage credit | 483,741 | 2,017,730 | 25,419,482 | 27,920,953 | 151,456 | 28,072,409
Other domestic activities | 250 | 402 | 428 | 1,080 | 707 | 1,787
Other international activities | 215,105 | 98,822 | 145,989 | 459,916 | 7,348 | 467,264
| 7,864,132 | 13,716,372 | 34,177,068 | 55,757,572 | 1,064,113 | 56,821,685

2022 REPORT & ACCOUNTS |

| 257
The analysis of loans and advances to customers, by type of credit and by maturity, as at 31 December 2022, is as
follows:

|  |  |  |  | (Thousands of euros)
| 2022
| Outstanding loans |  |
| Due within 1 year | 1 year to 5 years | Over 5 years | Total Outstanding | Overdue loans | Total
Public sector | 21,138 | 19,832 | 543,029 | 583,999 | — | 583,999
Asset-backed loans | 1,608,240 | 3,615,091 | 27,010,051 | 32,233,382 | 123,063 | 32,356,445
Other guaranteed loans | 842,171 | 3,866,580 | 958,781 | 5,667,532 | 100,085 | 5,767,617
Unsecured loans | 2,660,372 | 3,452,035 | 1,345,905 | 7,458,312 | 258,186 | 7,716,498
Foreign loans | 171,535 | 785,272 | 1,500,328 | 2,457,135 | 2,451 | 2,459,586
Factoring operations | 2,592,313 | 426,935 | 3,000 | 3,022,248 | 16,680 | 3,038,928
Finance leases | 568,990 | 1,474,055 | 2,133,284 | 4,176,329 | 78,764 | 4,255,093
| 8,464,759 | 13,639,800 | 33,494,378 | 55,598,937 | 579,229 | 56,178,166

The analysis of loans and advances to customers, by type of credit and by maturity, as at 31 December 2021, is as
follows:

|  |  |  |  | (Thousands of euros)
| 2021
| Outstanding loans |  |
| Due within 1 year | 1 year to 5 years | Over 5 years | Total Outstanding | Overdue loans | Total
Public sector | 24,756 | 28,028 | 582,640 | 635,424 | — | 635,424
Asset-backed loans | 1,638,995 | 3,843,990 | 26,942,261 | 32,425,246 | 528,636 | 32,953,882
Other guaranteed loans | 811,185 | 3,992,200 | 1,378,860 | 6,182,245 | 99,957 | 6,282,202
Unsecured loans | 2,480,837 | 3,515,890 | 1,426,789 | 7,423,516 | 347,056 | 7,770,572
Foreign loans | 129,608 | 377,963 | 1,702,732 | 2,210,303 | 8,497 | 2,218,800
Factoring operations | 2,217,684 | 507,242 | 154 | 2,725,080 | 11,304 | 2,736,384
Finance leases | 561,067 | 1,451,059 | 2,143,632 | 4,155,758 | 68,663 | 4,224,421
| 7,864,132 | 13,716,372 | 34,177,068 | 55,757,572 | 1,064,113 | 56,821,685

The item Loans and advances to customers, split by stage according with IFRS 9, is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Stage 1 |  |
Gross amount | 46,404,751 | 46,115,097
Impairment | (214,469) | (207,328)
| 46,190,282 | 45,907,769
Stage 2 |  |
Gross amount | 7,567,944 | 7,969,921
Impairment | (284,653) | (283,657)
| 7,283,291 | 7,686,264
Stage 3 |  |
Gross amount | 2,205,471 | 2,736,666
Impairment | (1,003,251) | (1,358,298)
| 1,202,220 | 1,378,368
| 54,675,793 | 54,972,401

The exposure and impairment of the above table also includes the operations classified as POCI as detailed in note 54.

| 2022 REPORT & ACCOUNTS

258 |
The analysis of the exposure covered by collaterals associated with loans and advances to customers' portfolio, by stage
according with IFRS 9, considering the collaterals' fair value, is as follows:

| (Thousands of euros)
| 2022 | 2021
Stage 1 |  |
Securities and other financial assets | 1,533,809 | 1,253,189
Residential real estate | 24,796,864 | 23,489,794
Other real estate | 3,475,795 | 3,182,387
Other guarantees | 7,654,261 | 6,961,806
| 37,460,729 | 34,887,176
Stage 2 |  |
Securities and other financial assets | 192,025 | 268,388
Residential real estate | 2,507,458 | 2,645,791
Other real estate | 1,158,362 | 1,551,993
Other guarantees | 1,744,218 | 1,715,619
| 5,602,063 | 6,181,791
Stage 3 |  |
Securities and other financial assets | 28,765 | 71,291
Residential real estate | 432,138 | 540,907
Other real estate | 516,903 | 578,807
Other guarantees | 235,900 | 404,485
| 1,213,706 | 1,595,490
| 44,276,498 | 42,664,457

The balance Other guarantees include first-demand guarantees issued by the Bank and other entities, with an internal
risk rating of 7 or better; personal guarantees, when the guarantors are classified with internal risk grade 7 or better.
This balance also includes pledges, assets subject to financial leasing operations and personal guarantees, among
others.
Considering the policy of risk management of the Group (note 54), the amounts presented do not include the fair value
of the personal guarantees provided by clients with lower risk rating. When considered, the fair value of the personal
guarantees corresponds to the guaranteed amount.
The Group is applying physical collaterals and financial guarantees as instruments to mitigate the credit risk. The
physical collaterals are mainly mortgages on residential buildings for the mortgage portfolio and other mortgages on
other types of buildings related to other types of loans. To reflect the market value, these collaterals are regularly
reviewed based on independent and certified valuation entities or through the application of revaluation coefficients
that reflect the market trends for each specific type of building and geographical area. The financial guarantees are
reviewed based on the market value of the respective assets, when available, with the subsequent application of
haircuts that reflect the volatility of their prices. Considering the current real estate and financial markets conditions,
the Group continued to negotiate additional physical and financial collaterals with its customers.

2022 REPORT & ACCOUNTS |

| 259
The loan to customers' portfolio includes contracts that resulted in a formal restructuring with the customers and the
consequent establishment of a new funding to replace the previous and which arise to the marking of operations as
being restructured due to financial difficulties of customers. The restructuring may include in a reinforce of
guarantees, liquidation of part of the credit as well as changes in the payment plan and/or in interest rate. The
analysis of the restructured loans, by sector of activity, is as follows:

|  |  |  |  | (Thousands of euros)
| 2022 | 2021
| Restructured loans | Impairment (*) | Net amount | Restructured loans | Impairment (*) | Net amount
Agriculture and forestry | 15,009 | (2,216) | 12,793 | 12,408 | (2,838) | 9,570
Fisheries | 2,772 | (1,762) | 1,010 | 3,705 | (1,568) | 2,137
Mining | 1,305 | (199) | 1,106 | 10,360 | (275) | 10,085
Food, beverage and tobacco | 28,393 | (10,112) | 18,281 | 26,556 | (7,468) | 19,088
Textiles | 14,120 | (4,981) | 9,139 | 14,877 | (4,336) | 10,541
Wood and cork | 6,088 | (784) | 5,304 | 7,030 | (1,034) | 5,996
Paper, printing and publishing | 8,698 | (1,701) | 6,997 | 6,911 | (1,825) | 5,086
Chemicals | 30,146 | (11,809) | 18,337 | 27,056 | (8,744) | 18,312
Machinery, equipment and basic metallurgical | 74,637 | (22,688) | 51,949 | 79,015 | (16,826) | 62,189
Electricity and gas | 1,133 | (255) | 878 | 603 | (113) | 490
Water | 1,767 | (734) | 1,033 | 14,812 | (9,673) | 5,139
Construction | 151,970 | (94,787) | 57,183 | 183,645 | (74,672) | 108,973
Retail business | 38,861 | (10,085) | 28,776 | 42,916 | (13,218) | 29,698
Wholesale business | 68,474 | (13,627) | 54,847 | 86,149 | (14,276) | 71,873
Restaurants and hotels | 97,002 | (16,126) | 80,876 | 130,031 | (17,508) | 112,523
Transports | 9,620 | (1,767) | 7,853 | 9,945 | (2,001) | 7,944
Post offices | 125 | (33) | 92 | 149 | (56) | 93
Telecommunications | 25,228 | (4,066) | 21,162 | 28,566 | (5,225) | 23,341
Services |  |  |  |  |  |
Financial intermediation | 54,764 | (19,879) | 34,885 | 144,402 | (76,108) | 68,294
Real estate activities | 45,785 | (9,927) | 35,858 | 96,019 | (15,212) | 80,807
Consulting, scientific and technical activities | 190,444 | (63,606) | 126,838 | 205,449 | (33,369) | 172,080
Administrative and support services activities | 67,941 | (46,519) | 21,422 | 72,439 | (45,569) | 26,870
Public sector | 63,016 | (427) | 62,589 | 58,940 | (307) | 58,633
Education | 17,310 | (11,358) | 5,952 | 20,357 | (10,415) | 9,942
Health and collective service activities | 8,428 | (1,206) | 7,222 | 29,690 | (7,853) | 21,837
Artistic, sports and recreational activities | 19,732 | (8,865) | 10,867 | 166,973 | (91,547) | 75,426
Other services | 11,855 | (1,601) | 10,254 | 249,210 | (176,099) | 73,111
Consumer loans | 274,500 | (99,459) | 175,041 | 273,902 | (93,134) | 180,768
Mortgage credit | 535,948 | (69,129) | 466,819 | 555,922 | (55,970) | 499,952
Other domestic activities | — | — | — | 48 | (26) | 22
Other international activities | 977 | (594) | 383 | 5,910 | (5,169) | 741
| 1,866,048 | (530,302) | 1,335,746 | 2,563,995 | (792,434) | 1,771,561

(*)The impairment presented in the table does not include the amounts of impairment calculated using the overlays methodology
described in point i. of the section "Additional measures with impact on the Impairment level" of note 54.

| 2022 REPORT & ACCOUNTS

260 |
The breakdown of the restructured loans as at 31 December 2022, by restructuring measure, is as follows:

|  |  |  |  | (Thousands of euros)
| 2022
| Number of operations | Outstanding loans | Overdue loans | Gross amount | Impairment (*) | Net amount
Extension of the repayment term | 40,796 | 383,529 | 64,104 | 447,633 | (130,635) | 316,998
Introduction of the grace period for capital and / or interest | 7,359 | 433,555 | 30,187 | 463,742 | (134,502) | 329,240
Interest rate reduction | 3,933 | 147,583 | 5,694 | 153,277 | (105,411) | 47,866
Payment plan change | 10,832 | 233,879 | 9,338 | 243,217 | (21,762) | 221,455
Debt relief | 105 | 935 | 1,693 | 2,628 | (1,391) | 1,237
Debt-asset swaps | 4 | 368 | 21 | 389 | (31) | 358
Other restructured loans | 6,877 | 507,410 | 47,752 | 555,162 | (136,570) | 418,592
| 69,906 | 1,707,259 | 158,789 | 1,866,048 | (530,302) | 1,335,746

The breakdown of the restructured loans as at 31 December 2021, by restructuring measure, is as follows:

|  |  |  |  | (Thousands of euros)
| 2021
| Number of operations | Outstanding loans | Overdue loans | Gross amount | Impairment (*) | Net amount
Extension of the repayment term | 39,767 | 614,627 | 76,723 | 691,350 | (149,925) | 541,425
Introduction of the grace period for capital and / or interest | 6,303 | 459,222 | 352,001 | 811,223 | (352,912) | 458,311
Interest rate reduction | 4,949 | 248,877 | 11,085 | 259,962 | (130,692) | 129,270
Payment plan change | 9,826 | 287,763 | 7,813 | 295,576 | (28,135) | 267,441
Debt relief | 289 | 1,630 | 5,692 | 7,322 | (5,055) | 2,267
Debt-asset swaps | 7 | 441 | 1,270 | 1,711 | (1,318) | 393
Other restructured loans | 10,263 | 425,088 | 71,763 | 496,851 | (124,397) | 372,454
| 71,404 | 2,037,648 | 526,347 | 2,563,995 | (792,434) | 1,771,561

(*) The impairment presented in the tables does not include the amounts of impairment calculated using the overlays methodology described in
point i. of the section "Additional measures with impact on the Impairment level" of note 54.
The restructured loans are also subject to an impairment analysis resulting from the revaluation of expectation to meet
new cash flows inherent to the new contract terms and considering new collaterals.
The Group has implemented a process for marking operations restructured due to clients' financial difficulties. This
marking is part of the credit analysis process, being in charge of the respective decision-making bodies, according to
the corresponding competencies, established in the regulations in force.
The information on operations restructured due to financial difficulties is available in the Group's information systems,
having a relevant role in the processes of credit analysis, in the marking of customers in default and in the process of
determining impairment. In particular:
- there are several default triggers related to restructuring due to financial difficulties (restructuring with loss of value,
recidivism of restructuring, default on customers with restructured operations);
- in the process of individual impairment analysis, in addition to the existence of operations restructured due to
financial difficulties, being a reason for customer selection, the loss inherent to the change in the conditions resulting
from the restructuring is determined.

2022 REPORT & ACCOUNTS |

| 261
The demarcation of an operation marked as restructured due to financial difficulties, can only take place at least 2
periods after the date of marking, provided that a set of conditions exist that allow to conclude by the improvement of
the financial condition of the client. In the case of credits marked as Non-Performing Exposure (NPE), this 2-year period
will only start on the date of classification of the credit as performing.
The definition of Non-Performing Loans for more than 90 days (NPL > 90) incorporates total credit (past due plus
outstanding) associated with past due operations for more than 90 days. As at 31 December 2022, the amount
calculated is Euros 725,300,000 (31 December 2021: Euros 1,236,979,000).
All customers who check at least one of the following conditions are marked in default and therefore as NPE:
- Material payment delay of more than 90 days in the amounts of principal, interest or unpaid commissions on the due
date that, cumulatively, represent: more than 100 euros (retail) or more than 500 euros (non-retail); and more than 1%
of the total debt (direct liabilities).
- Indications of low probability of payment:
a) Credit restructuring due to financial difficulties with loss of value; b) Delay after restructuring due to financial
difficulties; c) Recurrence of restructuring due to financial difficulties; d) Credit with signs of impairment (or Stage 3 of
IFRS 9); e) Insolvency or equivalent process; f) Litigation; g) Guarantees of operations in default; h) Loss of credit sales;
i) Credit fraud; j) Unpaid credit status; k) Breach of covenants in a credit agreement; l) Contagion of default in an
economic group; m) Cross default in the BCP Group.
As at 31 December 2022, the NPE associated with Loans and advances customers at amortized cost amounts to Euros
2,205,471,000 (31 December 2021: Euros 2,736,666,000).
The changes occurred in Loans impairment are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Balance on 1 January | 1,849,284 | 2,036,522
Charge for the year in net income interest | 32,942 | 25,935
Transfers resulting from changes in the Group's structure | — | (375)
Other transfers | (53,634) | 4,778
Impairment charge for the year (note 11) | 830,750 | 861,212
Reversals for the year (note 11) | (506,926) | (487,084)
Loans charged-off |  |
Write-offs | (458,405) | (372,710)
Credit assignments | (189,061) | (227,470)
Exchange rate differences | (2,577) | 8,476
Balance at the end of the year | 1,502,373 | 1,849,284

The balance Other transfers includes the amount of Euros 52,794,000 related to impairment for loans that were
reclassified to Financial assets not held for trading mandatorily at fair value through profit or loss - Loans and advances
to customers at fair value.
According to note 39, regarding the proceedings related to foreign currency-indexed mortgage loans of Bank Millennium
the amount of Euros 976,782,000 has been writenn-off from the gross carrying amount of loans portfolio (31 December
2021: Euros 636,309,000).

| 2022 REPORT & ACCOUNTS

262 |
The analysis of Write-offs, by sector of activity, is as follows:

| (Thousands of euros)
| 2022 | 2021
Agriculture and forestry | 271 | 1,729
Fisheries | 1 | 9
Mining | 46 | 12
Food, beverage and tobacco | 1,696 | 2,009
Textiles | 1,405 | 1,207
Wood and cork | 2,083 | 294
Paper, printing and publishing | 141 | 1,701
Chemicals | 1,425 | 1,403
Machinery, equipment and basic metallurgical | 2,613 | 7,404
Electricity and gas | 615 | 59
Water | 39 | 166
Construction | 9,992 | 9,697
Retail business | 10,324 | 5,118
Wholesale business | 13,782 | 15,373
Restaurants and hotels | 3,482 | 27,445
Transports | 6,527 | 9,168
Post offices | 128 | 131
Telecommunications | 72 | 321
Services |  |
Financial intermediation | 72,244 | 36,474
Real estate activities | 306 | 41,988
Consulting, scientific and technical activities | 1,119 | 5,782
Administrative and support services activities | 2,839 | 18,147
Public sector | — | 1
Education | 48 | 213
Health and collective service activities | 179 | 194
Artistic, sports and recreational activities | 6,492 | 429
Other services | 240,544 | 606
Consumer loans | 69,019 | 54,376
Mortgage credit | 3,581 | 3,583
Other domestic activities | 838 | 23,658
Other international activities | 6,554 | 104,013
| 458,405 | 372,710

According with the accounting policy described in note 1 C1.3, the Group writes off a loan when it does not have
reasonable expectations of recovering a financial asset in its entirety or partially. This registration occurs after all the
recovery actions developed by the Group prove to be fruitless. Loans written-off are recognised in off-balance sheet
accounts.
The analysis of Write-offs, by type of credit, is as follows:

| (Thousands of euros)
| 2022 | 2021
Asset-backed loans | 3,296 | 15,793
Other guaranteed loans | 313,915 | 3,946
Unsecured loans | 128,131 | 225,410
Foreign loans | — | 103,452
Factoring operations | — | 3,300
Finance leases | 13,063 | 20,809
| 458,405 | 372,710

2022 REPORT & ACCOUNTS |

| 263
The analysis of recovered loans and interest occurred during 2022 and 2021, by sector of activity, is as follows:

| (Thousands of euros)
| 2022 | 2021
Agriculture and forestry | 6 | 159
Mining | — | 97
Food, beverage and tobacco | 34 | 95
Textiles | 41 | 245
Wood and cork | 43 | 26
Paper, printing and publishing | — | 2
Chemicals | 105 | 673
Machinery, equipment and basic metallurgical | 165 | 1,216
Electricity and gas | — | 12
Water | — | 9
Construction | 2,719 | 1,591
Retail business | 757 | 1,016
Wholesale business | 113 | 811
Restaurants and hotels | 67 | 121
Transports | 56 | 137
Post offices | 1 | 2
Telecommunications | 2 | 5
Services |  |
Financial intermediation | 619 | 143
Real estate activities | 483 | 146
Consulting, scientific and technical activities | 8 | 37
Administrative and support services activities | 29 | 931
Education | 5 | 2
Health and collective service activities | 1 | 1
Artistic, sports and recreational activities | 3 | 6
Other services | 8 | 75
Consumer loans | 13,967 | 13,185
Mortgage credit | 130 | 832
Other domestic activities | 29 | 1,198
Other international activities | 1,446 | 165
| 20,837 | 22,938

The analysis of recovered loans and interest occurred during 2022 and 2021, by type of credit, is as follows:

| (Thousands of euros)
| 2022 | 2021
Asset-backed loans | 130 | 818
Other guaranteed loans | 4,237 | 1,547
Unsecured loans | 16,301 | 18,089
Foreign loans | 80 | 1,210
Factoring operations | — | 22
Finance leases | 89 | 1,252
| 20,837 | 22,938

| 2022 REPORT & ACCOUNTS

264 |
The balance Loans and advances to customers includes the effect of traditional securitization transactions made
through Special Purpose Entities (SPE) consolidated following the application of IFRS 10, in accordance with accounting
policy 1 B and synthetic securitization. The characterization of these operations is described in note 1 D.
Traditional securitizations
The traditional securitization transaction engaged by the Group and still ongoing, refers to mortgage loans portfolios
and are set through securitization funds and special purpose entities (SPEs). As referred in accounting policy 1 B, when
the substance of the relationships with the referred SPEs indicates that the Group holds control of its activities, those
are consolidated by the full method.
Magellan Mortgages No. 3
On 24 June 2005, the Bank transferred, through securitization funds, an owned mortgage loans portfolio to the SPE
“Magellan Mortgages No. 3 PLC”. Considering that, by having acquired part of the subordinated tranche of the bonds
issued by that SPE, the Bank holds the control of the referred assets, the SPE is consolidated in the Group’s Financial
Statements, as established in the accounting policy 1.B. As at 31 December 2022, the SPE's credit portfolio associated
with this operation amounts to Euros 188,214.000 (31 December 2021: Euros 215.259.000) and bonds issued with
different subordination levels amount to Euros 142.062.000 (this amount excludes bonds hold by the Group in the
amount of Euros 63.937.000) and the most subordinated tranche amounts to Euros 44,000 (this amount excludes bonds
already acquired by the Group in the amount Euros 206,000).
Synthetic securitizations
As at 31 December 2022, BCP has three operations in progress which form structures of synthetic securitization with
similar characteristics, with reference to credit portfolios granted by the Bank mainly to Small and Medium Enterprises
(SMEs).
Caravela SME No. 3
Caravela SME No.3, supports an operation started on 28 June 2013, based on a medium and long term loans portfolio of
current accounts and authorized overdrafts. The legal maturity date of the operation is 25 March of 2036 and the
operation amounts to Euros 276,209,000 as at 31 December 2022 (31 December 2021: Euros 395,657,000). The fair value
of the relative Credit Default Swap (CDS) is recorded as a positive amount of Euros 179,713,000 and the respective
registered cost in 2022 amounts to Euros 4,824,000.
Caravela SME No. 4
Caravela SME No.4 is a similar operation, initiated on 5 June 2014, which portfolio contains car, real estate and
equipment leasing. The legal maturity date is 21 September of 2043 and, as at 31 December 2022, the operation
amounts to Euros 506,117,000 (31 December 2021: Euros 627,053,000). The fair value of the relative CDS is recorded as
a positive amount of Euros 61.551.000 and the respective registered cost in 2022 amounts to Euros 2,026,000.

2022 REPORT & ACCOUNTS |

| 265
Caravela SME No.5
Caravela SME No.5, initiated on 20 December 2022, is supported by a portfolio of medium and long term loans, leasing
contract and commercial paper programmes. The legal maturity date is 26 September of 2035 and, as at 31 December
2022, the operation amounts to Euros 1,918,408,000. The fair value of the relative CDS is recorded as a negative
amount of Euros 76,000 and the respective registered cost in 2022 amounts to Euros 1,424,000.
In any of these operations, the Bank contracted a Credit Default Swap (CDS) from a Special Purpose Entity (SPE),
buying, this way, protection over the total referenced portfolio. As in all synthetic securitizations, under CDS, the risk
of the respective portfolios was divided in 3 tranches: senior, mezzanine and equity. In the case of both Caravela no. 3
and no. 4, the mezzanine and part of the equity (20%) were placed in the market through the issuance of Credit Linked
Notes (CLNs) by the above mentioned SPE which were subscribed by investors, while the Group retained the senior risk
and the remaining part of the equity (80%). In the case of Caravela, SME no. 5, only the full amount of the mezzanine
was placed in the market, while the Group retained the risk of the full amount of the senior and equity tranches. The
product of the CLNs issue was invested by the SPE in a deposit, which fully collateralizes the responsibilities in the
presence of its creditors including BCP, in accordance with the CDS.
These operations allowed the Bank to reduce the risk-weighted assets associated with the credit portfolios supporting
the operations, but the Bank did not transfer to third parties most of the rights and obligations arising from the credits
included in the respective portfolios, thus not meeting the derecognition criteria in the accounting policy presented in
note 1 C1.3.
Bank's Millennium securitization transactions
In March 2022, the Group's subsidiary Bank Millennium concluded a synthetic securitization transaction with the
participation of European Investment Bank (EIB) and European Investment Fund (EIF). The portfolio covered by the
transaction concerned receivables from small and medium-sized enterprises (SME) worth ca PLN 1.5 billion (Euros 320
million). Bank Millennium obtained the EIF guarantee for the senior tranche (ca PLN 1.2 billion [Euros 256 million]) and
the junior tranche (ca PLN 300 million [Euros 64 million]), which is unfunded credit protection within the meaning of
the CRR. The selected loan portfolio covered by the securitization remained in the Bank Millennium''s balance sheet.
On 23 December 2022, Bank Millennium settled another synthetic securitisation transaction executed on a portfolio of
corporate and SME receivables. The selected loan portfolio securitised remained on the bank's balance sheet. The risk
transfer was affected by a recognised credit protection instrument in the form of Credit Linked Notes (CLNs). The
issued bonds with a total nominal value of PLN 242.5 million (Euros 51.8 million) were acquired by a fund.
The transaction meets the requirements for the transfer of a material part of the risk, set out in the CRR Regulation
(Regulation of the European Parliament and of the Council No. 575/2013 of 26 June 2013 on prudential requirements
for credit institutions and investment firms).

| 2022 REPORT & ACCOUNTS

266 |
23.Debt securities
The balance Debt securities is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Debt securities held associated with credit operations |  |
Portuguese issuers |  |
Bonds | 183,260 | 197,723
Commercial paper | 1,256,557 | 1,074,715
Foreign issuers |  |
Commercial paper | 65,781 | 42,920
| 1,505,598 | 1,315,358
Overdue securities - over 90 days | 40 | 40
| 1,505,638 | 1,315,398
Impairment | (4,676) | (7,059)
| 1,500,962 | 1,308,339
Debt securities held not associated with credit operations |  |
Bonds issued by public entities (*) |  |
Portuguese issuers | 3,517,560 | 3,781,480
Foreign issuers | 7,317,443 | 2,438,017
Bonds issued by other entities |  |
Portuguese issuers | 248,399 | 59,816
Foreign issuers | 124,438 | 33,706
Treasury bills (Public Issuers and Central Banks) |  |
Foreign issuers | 336,343 | 592,581
| 11,544,183 | 6,905,600
Impairment | (9,563) | (8,743)
| 11,534,620 | 6,896,857
| 13,035,582 | 8,205,196

(*) Includes the negative amount of Euros 417,311,000 (31 December 2021: negative amount of Euros 17,349,000) related to
adjustments resulting from the application of fair value hedge accounting.
Under the terms of IFRS 9, the balance Debt securities held not associated with credit operations - Bonds issued by
public issuers, includes essentially a portfolio of securities to support Bank's ALM (Asset and Liability Management),
whose business model seeks to receive the respective income until maturity, that is, of a portfolio Held to Collect,
whose value as at 31 December 2022 amounts to Euros 9,248,707,000 (31 December 2021: Euros 5,409,085,000).
The balance Debt securities held not associated with credit operations - Bonds issued by other entities includes the
amount of Euros 69,805,000 (31 December 2021: Euros 39,519,000) related to public sector companies.

2022 REPORT & ACCOUNTS |

| 267
The analysis of the balance Debt securities before impairment, by maturity, as at 31 December 2022 is as follows:

|  |  |  |  | (Thousands of euros)
| 2022
| Up to 3 months | 3 months to 1 year | 1 year to 5 years | Over 5 years | Overdue | Total
Debt securities held associated |  |  |  |  |  |
with credit operations |  |  |  |  |  |
Portuguese issuers |  |  |  |  |  |
Bonds | — | — | 13,480 | 169,780 | — | 183,260
Commercial paper | 860,395 | 396,162 | — | — | 40 | 1,256,597
Foreign issuers |  |  |  |  |  |
Commercial paper | 31,361 | 34,420 |  |  |  | 65,781
| 891,756 | 430,582 | 13,480 | 169,780 | 40 | 1,505,638
Debt securities held not associated |  |  |  |  |  |
with credit operations |  |  |  |  |  |
Public entities |  |  |  |  |  |
Portuguese issuers | — | — | 1,865,689 | 1,651,871 | — | 3,517,560
Foreign issuers | 50,410 | 212,482 | 970,601 | 6,083,950 | — | 7,317,443
Other entities |  |  |  |  |  |
Portuguese issuers | — | — | 153,548 | 94,851 | — | 248,399
Foreign issuers | — | 97,962 | — | 26,476 | — | 124,438
Treasury bills (Public Issuers and Central Banks) |  |  |  |  |  |
Foreign issuers | 237,209 | 99,134 | — | — |  | 336,343
| 287,619 | 409,578 | 2,989,838 | 7,857,148 | — | 11,544,183
| 1,179,375 | 840,160 | 3,003,318 | 8,026,928 | 40 | 13,049,821

| 2022 REPORT & ACCOUNTS

268 |
The analysis of the balance Debt securities before impairment, by maturity, as at 31 December 2021 is as follows:

|  |  |  |  | (Thousands of euros)
| 2021
| Up to 3 months | 3 months to 1 year | 1 year to 5 years | Over 5 years | Overdue | Total
Debt securities held associated |  |  |  |  |  |
with credit operations |  |  |  |  |  |
Portuguese issuers |  |  |  |  |  |
Bonds | — | — | 5,542 | 192,181 | — | 197,723
Commercial paper | 794,596 | 280,119 | — | — | 40 | 1,074,755
Foreign issuers |  |  |  |  |  |
Commercial paper | 6,426 | 36,494 | — | — | — | 42,920
| 801,022 | 316,613 | 5,542 | 192,181 | 40 | 1,315,398
Debt securities held not associated |  |  |  |  |  |
with credit operations |  |  |  |  |  |
Public entities |  |  |  |  |  |
Portuguese issuers | — | 99,898 | 883,952 | 2,797,630 | — | 3,781,480
Foreign issuers | 4,659 | 40,048 | 288,741 | 2,104,569 | — | 2,438,017
Other entities |  |  |  |  |  |
Portuguese issuers | — | — | 13,691 | 46,125 | — | 59,816
Foreign issuers | — | — | — | 33,706 | — | 33,706
Treasury bills (Public Issuers and Central Banks) |  |  |  |  |  |
Foreign issuers | 143,081 | 449,500 | — | — | — | 592,581
| 147,740 | 589,446 | 1,186,384 | 4,982,030 | — | 6,905,600
| 948,762 | 906,059 | 1,191,926 | 5,174,211 | 40 | 8,220,998

2022 REPORT & ACCOUNTS |

| 269
The analysis of debt securities portfolio, net of impairment, by sector of activity, is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Debt securities held associated with credit operations |  |
Agriculture and forestry | 2,496 | 4,733
Mining | 46,403 | 13,736
Food, beverage and tobacco | 79,448 | 63,815
Textiles | 58,555 | 57,140
Wood and cork | 19,630 | 12,103
Paper, printing and publishing | 8,104 | 7,184
Chemicals | 179,516 | 77,930
Machinery, equipment and basic metallurgical | 65,973 | 48,453
Electricity and gas | 165,676 | 172,325
Water | 5,475 | 8,891
Construction | 13,397 | 13,876
Retail business | 20,507 | 13,601
Wholesale business | 56,698 | 62,450
Restaurants and hotels | 8,789 | 4,119
Transports | 36,591 | 37,731
Telecommunications | 9,706 | 6,559
Services |  |
Financial intermediation | 107,372 | 54,300
Real estate activities | 50,845 | 40,150
Consulting, scientific and technical activities | 473,231 | 541,187
Administrative and support services activities | 12,269 | 10,706
Artistic, sports and recreational activities | 10,406 | 9,868
Other services | 4,095 | 4,562
Other international activities | 65,780 | 42,920
| 1,500,962 | 1,308,339
Debt securities held not associated with credit operations |  |
Electricity and Gas | 88,873 | 6,573
Water | 39,704 | 39,478
Services |  |
Financial intermediation | 460,781 | 626,287
Consulting, scientific and technical activities | 119,297 | 13,511
| 708,655 | 685,849
Government and Public securities | 10,825,965 | 6,211,008
| 11,534,620 | 6,896,857
| 13,035,582 | 8,205,196

| 2022 REPORT & ACCOUNTS

270 |
The changes occurred in impairment of debt securities are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Debt securities held associated with credit operations |  |
Balance on 1 January | 7,059 | 11,021
Charge for the year in net income interest | — | 47
Charge for the year (note 11) | 8 | 244
Reversals for the year (note 11) | (2,393) | (2,533)
Loans charged-off | — | (1,721)
Exchange rate differences | 2 | 1
Balance at the end of the year | 4,676 | 7,059
Debt securities held not associated with credit operations |  |
Balance on 1 January | 8,743 | 5,332
Transfers resulting from changes in the Group's structure (Seguradora Internacional de Moçambique, S.A.) | — | (15)
Other transfers | — | (13)
Charge for the year (note 11) | 3,329 | 4,874
Reversals for the year (note 11) | (2,779) | (1,826)
Exchange rate differences | 270 | 391
Balance at the end of the year | 9,563 | 8,743

24.Financial assets at fair value through profit or loss and financial assets at fair
value through other comprehensive income
The balances Financial assets at fair value through profit or loss and Financial assets at fair value through other
comprehensive income are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Financial assets at fair value through profit or loss |  |
Financial assets held for trading |  |
Debt instruments | 338,813 | 452,105
Equity instruments | 51,540 | 48,879
Trading derivatives | 376,244 | 430,501
| 766,597 | 931,485
Financial assets not held for trading mandatorily at fair value through profit or loss |  |
Loans and advances to customers at fair value | 20,929 | 79,189
Debt instruments | 504,200 | 881,556
Equity instruments | 27,550 | 30,193
| 552,679 | 990,938
Financial assets at fair value through other comprehensive income |  |
Debt instruments | 7,434,152 | 12,856,165
Equity instruments | 27,401 | 34,823
| 7,461,553 | 12,890,988
| 8,780,829 | 14,813,411

2022 REPORT & ACCOUNTS |

| 271
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive income, net of impairment, by type of asset, as
at 31 December 2022, is analysed as follows:

|  |  | (Thousands of euros)
| 2022
| At fair value through profit or loss |  |
| Held for trading | Not held for trading mandatorily at fair value through profit or loss | At fair value through other comprehensive income | Total
Debt instruments |  |  |  |
Bonds issued by public entities |  |  |  |
Portuguese issuers | 21,450 | — | 2,448,636 | 2,470,086
Foreign issuers | 8,353 | — | 2,916,098 | 2,924,451
Bonds issued by other entities |  |  |  |
Portuguese issuers | — | 51 | 542,765 | 542,816
Foreign issuers | 74 | — | 897,146 | 897,220
Treasury bills (Public Issuers and Central Banks) |  |  |  |
Portuguese issuers | 308,936 | — | 993 | 309,929
Foreign issuers | — | — | 628,514 | 628,514
Shares of foreign companies (a) | — | 19,387 | — | 19,387
Investment fund units (b) | — | 484,762 | — | 484,762
| 338,813 | 504,200 | 7,434,152 | 8,277,165
Equity instruments |  |  |  |
Shares |  |  |  |
Portuguese companies | — | — | 18,811 | 18,811
Foreign companies | 24 | 27,550 | 8,590 | 36,164
Other securities | 51,516 | — | — | 51,516
| 51,540 | 27,550 | 27,401 | 106,491
Trading derivatives | 376,244 | — | — | 376,244
| 766,597 | 531,750 | 7,461,553 | 8,759,900
Level 1 | 389,954 | — | 6,489,282 | 6,879,236
Level 2 | 81,347 | — | 322,514 | 403,861
Level 3 | 295,296 | 531,750 | 649,757 | 1,476,803

(a)Under IFRS 9 these shares were considered as debt instruments because they do not fall within the definition of SPPI.
(b)Under IFRS 9 these participation units were considered as debt instruments because they do not fall within the definition of
equity instruments.
The portfolios are recorded at fair value in accordance with the accounting policy described in note 1 C. As referred in
IFRS 13, financial instruments are measured according to the levels of valuation described in note 49.
As at 31 December 2022, the balances Financial assets held for trading include bonds issued with different levels of
subordination associated with the traditional securitization transactions Magellan Mortgages No. 4, referred in note 1 D,
in the amount of Euros 74,000 (31 December 2021: Euros 87,000).

| 2022 REPORT & ACCOUNTS

272 |
As at 31 December 2022, the balance Financial assets at fair value through other comprehensive income - Bonds issued
by other entities - Portuguese issuers includes the amount of Euros 25,505,000 (31 December 2021: Euros 165,967,000)
related to public sector companies.
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive income, net of impairment, by type of asset, as
at 31 December 2021, is analysed as follows:

|  |  | (Thousands of euros)
| 2021
| At fair value through profit or loss |  |
| Held for trading | Not held for trading mandatorily at fair value through profit or loss | At fair value through other comprehensive income | Total
Debt instruments |  |  |  |
Bonds issued by public entities |  |  |  |
Portuguese issuers | 10,317 | — | 3,798,776 | 3,809,093
Foreign issuers | 18,857 | — | 6,736,241 | 6,755,098
Bonds issued by other entities |  |  |  |
Portuguese issuers | 1,716 | 16,734 | 742,554 | 761,004
Foreign issuers | 1,073 | — | 1,011,740 | 1,012,813
Treasury bills (Public Issuers and Central Banks) |  |  |  |
Portuguese issuers | 420,142 | — | 6,027 | 426,169
Foreign issuers | — | — | 560,827 | 560,827
Shares of foreign companies (a) | — | 35,185 | — | 35,185
Investment fund units (b) | — | 829,637 | — | 829,637
| 452,105 | 881,556 | 12,856,165 | 14,189,826
Equity instruments |  |  |  |
Shares |  |  |  |
Portuguese companies | — | — | 17,275 | 17,275
Foreign companies | 32 | 30,193 | 17,548 | 47,773
Other securities | 48,847 | — | — | 48,847
| 48,879 | 30,193 | 34,823 | 113,895
Trading derivatives | 430,501 | — | — | 430,501
| 931,485 | 911,749 | 12,890,988 | 14,734,222
Level 1 | 499,147 | — | 12,463,415 | 12,962,562
Level 2 | 169,181 | — | 303,629 | 472,810
Level 3 | 263,157 | 911,749 | 123,944 | 1,298,850

(a)Under IFRS 9, these shares were considered as debt instruments because they do not fall within the definition of SPPI.
(b)Under IFRS 9, these participation units were considered as debt instruments because they do not fall within the definition of
equity instruments.

2022 REPORT & ACCOUNTS |

| 273
On balance sheet, the changes occurred during the 2022 and 2021, for impairment of financial assets at fair value
through other comprehensive, are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Balance on 1 January | 1,092 | 1,097
Transfers to fair value changes (note 43) | 5,024 | (4,626)
Impairment through profit and loss (note 12) | 545 | 4,784
Reversals through profit and loss (note 12) | (5,569) | (158)
Exchange rate differences | (25) | (5)
Balance at the end of the year | 1,067 | 1,092

As at 31 December 2022, the accumulated impairment related to credit risk associated with the financial assets at fair
value through other comprehensive income amounts to Euros 5,270,000 and is recognised against Fair value reserves (31
December 2021: Euros 18,496,000).
The portfolio of financial assets at fair value through other comprehensive income, as at 31 December 2022, is analysed
as follows:

|  |  | (Thousands of euros)
| 2022
| Amortised cost (a) | Fair value hedge adjustments (note 43) | Fair value adjustments (note 43) | Total
Debt instruments |  |  |  |
Bonds issued by public entities |  |  |  |
Portuguese issuers | 2,708,319 | (169,699) | (89,984) | 2,448,636
Foreign issuers | 3,007,189 | — | (91,091) | 2,916,098
Bonds issued by other entities |  |  |  |
Portuguese issuers | 566,480 | (19,099) | (4,616) | 542,765
Foreign issuers | 1,023,516 | (83,632) | (42,738) | 897,146
Treasury bills (Public Issuers and Central Banks) |  |  |  |
Portuguese issuers | 994 | — | (1) | 993
Foreign issuers | 628,509 | — | 5 | 628,514
| 7,935,007 | (272,430) | (228,425) | 7,434,152
Equity instruments |  |  |  |
Shares |  |  |  |
Portuguese companies | 33,448 | — | (14,637) | 18,811
Foreign companies | 19,799 | — | (11,209) | 8,590
| 53,247 | — | (25,846) | 27,401
| 7,988,254 | (272,430) | (254,271) | 7,461,553

(a)Include interest accrued and accumulated impairment for debt securities classified as financial assets at fair value through other
comprehensive income, as provided by IFRS 9, and according to the requirements defined in the accounting policy 1 C1.5.1.2.

| 2022 REPORT & ACCOUNTS

274 |
The portfolio of financial assets at fair value through other comprehensive income, as at 31 December 2021, is analysed
as follows:

|  |  | (Thousands of euros)
| 2021
| Amortised cost (a) | Fair value hedge adjustments (note 43) | Fair value adjustments (note 43) | Total
Debt instruments |  |  |  |
Bonds issued by public entities |  |  |  |
Portuguese issuers | 3,780,832 | (23,435) | 41,379 | 3,798,776
Foreign issuers | 6,811,530 | (21,427) | (53,862) | 6,736,241
Bonds issued by other entities |  |  |  |
Portuguese issuers | 727,477 | 4,799 | 10,278 | 742,554
Foreign issuers | 1,001,729 | (1,051) | 11,062 | 1,011,740
Treasury bills (Public Issuers and Central Banks) |  |  |  |
Portuguese issuers | 6,026 | — | 1 | 6,027
Foreign issuers | 560,989 | — | (162) | 560,827
| 12,888,583 | (41,114) | 8,696 | 12,856,165
Equity instruments |  |  |  |
Shares |  |  |  |
Portuguese companies | 37,069 | — | (19,794) | 17,275
Foreign companies | 27,996 | — | (10,448) | 17,548
| 65,065 | — | (30,242) | 34,823
| 12,953,648 | (41,114) | (21,546) | 12,890,988

(a)Include interest accrued and accumulated impairment for debt securities classified as financial assets at fair value through other
comprehensive income, as provided by IFRS 9, and according to the requirements defined in the accounting policy 1 C1.5.1.2.
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive, net of impairment, as at 31 December 2022, by
valuation levels, is analysed as follows:

|  |  | (Thousands of euros)
| 2022
| Level 1 | Level 2 | Level 3 | Total
Debt instruments |  |  |  |
Bonds issued by public entities |  |  |  |
Portuguese issuers | 2,336,787 | 133,299 | — | 2,470,086
Foreign issuers | 2,908,924 | — | 15,527 | 2,924,451
Bonds issued by other entities |  |  |  |
Portuguese issuers | 416,374 | 57,212 | 69,230 | 542,816
Foreign issuers | 853,605 | 43,615 | — | 897,220
Treasury bills (Public Issuers and Central Banks) |  |  |  |
Portuguese issuers | 309,929 | — | — | 309,929
Foreign issuers | — | 88,462 | 540,052 | 628,514
Shares of Foreign companies (**) | — | — | 19,387 | 19,387
Investment fund units | — | — | 484,762 | 484,762
| 6,825,619 | 322,588 | 1,128,958 | 8,277,165
Equity instruments |  |  |  |
Shares |  |  |  |
Portuguese companies | 2,402 | — | 16,409 | 18,811
Foreign companies | 24 | — | 36,140 | 36,164
Other securities | 51,191 | — | 325 | 51,516
| 53,617 | — | 52,874 | 106,491
Trading derivatives | — | 81,273 | 294,971 | 376,244
| 6,879,236 | 403,861 | 1,476,803 | 8,759,900

2022 REPORT & ACCOUNTS |

| 275
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive, net of impairment, as at 31 December 2021, by
valuation levels, is analysed as follows:

|  |  | (Thousands of euros)
| 2021
| Level 1 | Level 2 | Level 3 | Total
Debt instruments |  |  |  |
Bonds issued by public entities |  |  |  |
Portuguese issuers | 3,690,781 | 118,312 | — | 3,809,093
Foreign issuers | 6,745,963 | — | 9,135 | 6,755,098
Bonds issued by other entities |  |  |  |
Portuguese issuers | 609,859 | 58,480 | 92,665 | 761,004
Foreign issuers | 936,559 | 76,254 | — | 1,012,813
Treasury bills (Public Issuers and Central Banks) |  |  |  |
Portuguese issuers | 426,169 | — | — | 426,169
Foreign issuers | 502,524 | 50,670 | 7,633 | 560,827
Shares of Foreign companies (**) | — | — | 35,185 | 35,185
Investment fund units | — | — | 829,637 | 829,637
| 12,911,855 | 303,716 | 974,255 | 14,189,826
Equity instruments |  |  |  |
Shares |  |  |  |
Portuguese companies | 1,964 | — | 15,311 | 17,275
Foreign companies | 32 | — | 47,741 | 47,773
Other securities | 48,711 | — | 136 | 48,847
| 50,707 | — | 63,188 | 113,895
Trading derivatives | — | 169,094 | 261,407 | 430,501
| 12,962,562 | 472,810 | 1,298,850 | 14,734,222

As referred in IFRS 13, financial instruments are measured according to the levels of valuation described in note 49.
The balance Debt instruments - Investment fund units classified as level 3 includes units in restructuring funds (note 47)
in the amount of Euros 410,571,000 (31 December 2021: Euros 786,801,000) which book value resulted from the last
disclosure of the Net Asset Value (NAV) determined by the Management Company, which corresponds to the NAV with
reference to that date, after considering the effects of the last audited accounts for the respective funds. These funds
have a diverse set of assets and liabilities, valued in their respective accounts at fair value through internal
methodologies used by the management company.
In 2022, the instruments classified as level 3 have associated net losses not performed in the amount of Euros
15,429,000 (2021: losses Euros 16,209,000) recorded in Other comprehensive income. The amount of impairment
created for these securities amounts to Euros 1,067,000 (2021: Euros 1,092,000).

| 2022 REPORT & ACCOUNTS

276 |
The analysis of Financial assets at fair value through profit or loss (excluding loans and advances at fair value and
trading derivatives) and Financial assets at fair value through other comprehensive, by residual maturity, as at 31
December 2022, is as follows:

|  |  |  |  | (Thousands of euros)
| 2022
| Up to 3 months | 3 months to 1 year | 1 year to 5 years | Over 5 years | Undetermined | Total
Debt instruments |  |  |  |  |  |
Bonds issued by public entities |  |  |  |  |  |
Portuguese issuers | — | 8,267 | 2,172,623 | 289,196 | — | 2,470,086
Foreign issuers | 416,699 | 493,389 | 1,863,833 | 150,530 | — | 2,924,451
Bonds issued by other entities |  |  |  |  |  |
Portuguese issuers | 163,229 | 58,247 | 300,962 | 20,378 | — | 542,816
Foreign issuers | 4,414 | 13,732 | 457,154 | 421,920 | — | 897,220
Treasury bills (Public Issuers and Central Banks) |  |  |  |  |  |
Portuguese issuers | 128,349 | 181,580 | — | — | — | 309,929
Foreign issuers | 56,638 | 571,876 | — | — | — | 628,514
Shares of Foreign companies | — | — | — | 19,387 | — | 19,387
Investment fund units | 5,942 | 38,534 | 286,844 | 147,967 | 5,475 | 484,762
| 775,271 | 1,365,625 | 5,081,416 | 1,049,378 | 5,475 | 8,277,165
Equity instruments |  |  |  |  |  |
Shares |  |  |  |  |  |
Portuguese companies |  |  |  |  | 18,811 | 18,811
Foreign companies |  |  |  |  | 36,164 | 36,164
Other securities |  |  |  |  | 51,516 | 51,516
| — | — | — | — | 106,491 | 106,491
| 775,271 | 1,365,625 | 5,081,416 | 1,049,378 | 111,966 | 8,383,656

2022 REPORT & ACCOUNTS |

| 277
The analysis of Financial assets at fair value through profit or loss (excluding loans and advances at fair value and
trading derivatives) and Financial assets at fair value through other comprehensive, by residual maturity, as at 31
December 2021, is as follows:

|  |  |  |  | (Thousands of euros)
| 2021
| Up to 3 months | 3 months to 1 year | 1 year to 5 years | Over 5 years | Undetermined | Total
Debt instruments |  |  |  |  |  |
Bonds issued by public entities |  |  |  |  |  |
Portuguese issuers | — | 32,301 | 1,370,717 | 2,406,075 | — | 3,809,093
Foreign issuers | — | 1,067,698 | 4,285,163 | 1,402,237 | — | 6,755,098
Bonds issued by other entities |  |  |  |  |  |
Portuguese issuers | 40,017 | 203 | 588,298 | 132,486 | — | 761,004
Foreign issuers | — | — | 389,622 | 623,191 | — | 1,012,813
Treasury bills (Public Issuers and Central Banks) |  |  |  |  |  |
Portuguese issuers | 270,511 | 155,658 | — | — | — | 426,169
Foreign issuers | 20,411 | 540,416 | — | — | — | 560,827
Shares of Foreign companies | — | — | — | — | 35,185 | 35,185
Investment fund units | — | — | 284,865 | 539,067 | 5,705 | 829,637
| 330,939 | 1,796,276 | 6,918,665 | 5,103,056 | 40,890 | 14,189,826
Equity instruments |  |  |  |  |  |
Shares |  |  |  |  |  |
Portuguese companies |  |  |  |  | 17,275 | 17,275
Foreign companies |  |  |  |  | 47,773 | 47,773
Other securities |  |  |  |  | 48,847 | 48,847
| — | — | — | — | 113,895 | 113,895
| 330,939 | 1,796,276 | 6,918,665 | 5,103,056 | 154,785 | 14,303,721

The balance Financial assets not held for trading mandatorily at fair value through profit or loss - Loans to customers at
fair value is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Unsecured loans | 17,217 | 74,248
Overdue loans - less than 90 days | 554 | 1,626
Overdue loans - Over 90 days | 3,158 | 3,315
| 20,929 | 79,189

The balance Loans to customers at fair value correspond essentially to consumer loans. This balance is analysed, by
remaining period, as follows:

| (Thousands of euros)
| 2022 | 2021
Up to 3 months | 1,733 | 6,083
3 months to 1 year | 6,220 | 30,028
1 to 5 years | 9,264 | 38,137
Undetermined | 3,712 | 4,941
| 20,929 | 79,189

| 2022 REPORT & ACCOUNTS

278 |
The analysis of Financial assets at fair value through profit or loss (excluding loans and advances to customers at fair
value and trading derivatives) and Financial assets at fair value through other comprehensive income, by sector of
activity, as at 31 December 2022, is as follows:

|  |  | (Thousands of euros)
| 2022
| Bonds and Treasury bills | Shares | Other Financial Assets | Total
Mining | — | 5 | — | 5
Paper, printing and publishing | 45,562 | 2 | — | 45,564
Chemicals | — | 2 | — | 2
Machinery, equipment and basic metallurgical | — | 6 | — | 6
Electricity and gas | 2,302 | — | — | 2,302
Water | 44,627 | — | — | 44,627
Construction | 9,460 | 2 | 20,159 | 29,621
Retail business | 4,934 | 2 | — | 4,936
Wholesale business | 20,503 | 260 | — | 20,763
Restaurants and hotels | 6,456 | 1,401 | — | 7,857
Transports | 29,491 | — | — | 29,491
Telecommunications | 38,869 | 4,401 | — | 43,270
Services |  |  |  |
Financial intermediation (*) | 1,533,154 | 54,477 | 512,408 | 2,100,039
Consulting, scientific and technical activities | 303,036 | 103 | — | 303,139
Administrative and support services activities | 26,691 | 8,629 | — | 35,320
Public sector | — | — | 325 | 325
Other services | 3,465 | 5,054 | 3,386 | 11,905
Other international activities | — | 18 | — | 18
| 2,068,550 | 74,362 | 536,278 | 2,679,190
Government and Public securities | 5,704,466 | — | — | 5,704,466
| 7,773,016 | 74,362 | 536,278 | 8,383,656

(*) The balance Other financial assets includes restructuring funds in the amount of Euros 410,571,000, which are classified in the
sector of activity Services - Financial intermediation but the core segment is disclosed in note 47.

2022 REPORT & ACCOUNTS |

| 279
The analysis of Financial assets at fair value through profit or loss (excluding loans and advances to customers at fair
value and trading derivatives) and Financial assets at fair value through other comprehensive income, by sector of
activity, as at 31 December 2021, is as follows:

|  |  | (Thousands of euros) |
| 2021
| Bonds and Treasury bills | Shares | Other Financial Assets | Total
Fisheries | 1,513 | — | — | 1,513
Mining | — | 6 | — | 6
Paper, printing and publishing | 47,865 | 1 | — | 47,866
Chemicals | — | 2 | — | 2
Machinery, equipment and basic metallurgical | — | 7 | — | 7
Electricity and gas | 43,805 | — | — | 43,805
Water | 10,241 | — | — | 10,241
Construction | 21,155 | 2 | 20,423 | 41,580
Retail business | 42,322 | 3 | — | 42,325
Wholesale business | 39,161 | 8,087 | — | 47,248
Restaurants and hotels | — | 1,330 | — | 1,330
Transports | 77,463 | — | — | 77,463
Telecommunications | 42,854 | 4,285 | — | 47,139
Services |  |  |  |
Financial intermediation (*) | 1,016,537 | 72,308 | 839,714 | 1,928,559
Real estate activities | — | — | 13,588 | 13,588
Consulting, scientific and technical activities | 455,409 | 103 | — | 455,512
Administrative and support services activities | 12,220 | 7,981 | — | 20,201
Public sector | — | — | 136 | 136
Artistic, sports and recreational activities | 16,683 | — | — | 16,683
Other services | 4,893 | 6,118 | 4,623 | 15,634
| 1,832,121 | 100,233 | 878,484 | 2,810,838
Government and Public securities | 11,492,883 | — | — | 11,492,883
| 13,325,004 | 100,233 | 878,484 | 14,303,721

(*) The balance Other financial assets includes restructuring funds in the amount of Euros 786,801,000, which are classified in the
sector of activity Services - Financial intermediation but the core segment is disclosed in note 47.

| 2022 REPORT & ACCOUNTS

280 |
The analysis of trading derivatives, by maturity, as at 31 December 2022, is as follows:

|  |  |  |  | (Thousands of euros)
| 2022
| Notional (remaining term) | Fair value
| Up to 3 months | 3 months to 1 year | Over 1 year | Total | Assets | Liabilities (note 37)
Interest rate derivatives: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Interest rate swaps | 79,053 | 233,349 | 3,425,079 | 3,737,481 | 53,994 | 119,629
Interest rate options (purchase) | — | 133,738 | 88,199 | 221,937 | 6,668 | —
Interest rate options (sale) | — | 133,738 | 88,200 | 221,938 | — | 6,555
| 79,053 | 500,825 | 3,601,478 | 4,181,356 | 60,662 | 126,184
Stock Exchange transactions: |  |  |  |  |  |
Interest rate futures | — | — | 66,888 | 66,888 | — | —
|  | — | 66,888 | 66,888 | — | —
Currency derivatives: |  |  |  |  |  |
OTC Market: |  |  |  | — |  |
Forward exchange contract | 222,128 | 253,830 | 9,349 | 485,307 | 6,013 | 9,418
Currency swaps | 1,580,200 | 198,362 | 8,256 | 1,786,818 | 14,081 | 23,245
| 1,802,328 | 452,192 | 17,605 | 2,272,125 | 20,094 | 32,663
Currency and interest rate swaps: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Currency and interest rate swaps: | 100,177 | — | — | 100,177 | 432 | 90
| 100,177 | — | — | 100,177 | 432 | 90
Shares/indexes: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Shares/indexes swaps | — | 523,118 | 459,431 | 982,549 | — | 27,193
Shares/indexes options (sale) | 576,242 | — | 20,971 | 597,213 | — | —
| 576,242 | 523,118 | 480,402 | 1,579,762 | — | 27,193
Stock exchange transactions: |  |  |  |  |  |
Shares futures | — | — | 835,835 | 835,835 | — | —
Shares/indexes options (purchase) | — | 59,735 | 533,092 | 592,827 | 53,707 | —
Shares/indexes options (sale) | — | 4,636 | 11,945 | 16,581 | — | 859
| — | 64,371 | 1,380,872 | 1,445,243 | 53,707 | 859
Credit derivatives: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Credit default swaps (CDS) | 2,000 | — | 395,831 | 397,831 | 241,349 | —
Other credit derivatives (sale) | — | — | 4,351 | 4,351 | — | —
| 2,000 | — | 400,182 | 402,182 | 241,349 | —
Total derivatives traded in: |  |  |  |  |  |
OTC Market | 2,559,800 | 1,476,135 | 4,499,667 | 8,535,602 | 322,537 | 186,130
Stock Exchange | — | 64,371 | 1,447,760 | 1,512,131 | 53,707 | 859
Embedded derivatives | 2,000 | — | 576,242 | 578,242 | — | 53,495
| 2,561,800 | 1,540,506 | 6,523,669 | 10,625,975 | 376,244 | 240,484

2022 REPORT & ACCOUNTS |

| 281
The analysis of trading derivatives, by maturity, as at 31 December 2021, is as follows:

|  |  |  |  | (Thousands of euros)
| 2021
| Notional (remaining term) | Fair value
| Up to 3 months | 3 months to 1 year | Over 1 year | Total | Assets | Liabilities (note 37)
Interest rate derivatives: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Forward rate agreement | — | 87,262 | — | 87,262 | — | —
Interest rate swaps | 139,913 | 144,247 | 4,304,339 | 4,588,499 | 153,276 | 195,144
Interest rate options (purchase) | — | 115,915 | 207,387 | 323,302 | 1,334 | —
Interest rate options (sale) | — | 32,498 | 207,387 | 239,885 | — | 1,345
| 139,913 | 379,922 | 4,719,113 | 5,238,948 | 154,610 | 196,489
Stock Exchange transactions: |  |  |  |  |  |
Interest rate futures | — | — | 51,800 | 51,800 | — | —
| — | — | 51,800 | 51,800 | — | —
Currency derivatives: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Forward exchange contract | 247,215 | 207,726 | 24,403 | 479,344 | 4,707 | 2,186
Currency swaps | 2,264,298 | 176,260 | 30,391 | 2,470,949 | 10,197 | 20,159
| 2,511,513 | 383,986 | 54,794 | 2,950,293 | 14,904 | 22,345
Shares/indexes: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Shares/indexes swaps | 16,670 | 19,560 | 606,000 | 642,230 | 2,191 | 2,284
Shares/indexes options (sale) | 168,901 | — | 19,902 | 188,803 | — | —
| 185,571 | 19,560 | 625,902 | 831,033 | 2,191 | 2,284
Stock exchange transactions: |  |  |  |  |  |
Shares futures | — | — | 890,922 | 890,922 | — | —
Shares/indexes options (purchase) | 15,831 | 32,697 | 124,239 | 172,767 | 6,328 | —
Shares/indexes options (sale) | 619 | 1,192 | 2,037 | 3,848 | — | 133
| 16,450 | 33,889 | 1,017,198 | 1,067,537 | 6,328 | 133
Commodity derivatives: |  |  |  |  |  |
Stock Exchange transactions: |  |  |  |  |  |
Commodities futures | — | — | 1 | 1 | — | —
| — | — | 1 | 1 | — | —
Credit derivatives: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Credit default swaps (CDS) | — | — | 268,745 | 268,745 | 252,468 | —
Other credit derivatives (sale) | — | — | 85,164 | 85,164 | — | —
| — | — | 353,909 | 353,909 | 252,468 | —
Total derivatives traded in: |  |  |  |  |  |
OTC Market | 2,836,997 | 783,468 | 5,753,718 | 9,374,183 | 424,173 | 221,118
Stock Exchange | 16,450 | 33,889 | 1,068,999 | 1,119,338 | 6,328 | 133
Embedded derivatives | — | 17,030 | 170,901 | 187,931 | — | 6,365
| 2,853,447 | 834,387 | 6,993,618 | 10,681,452 | 430,501 | 227,616

| 2022 REPORT & ACCOUNTS

282 |
25.Hedging derivatives
This balance is analysed, by hedging instruments, as follows:

|  |  | (Thousands of euros)
| 2022 | 2021
| Assets | Liabilities | Assets | Liabilities
Swaps | 59,703 | 178,000 | 109,059 | 377,206

Hedging derivatives are measured in accordance with internal valuation techniques considering observable market
inputs and, when not available, on information prepared by the Group by extrapolation of market data. In accordance
with the hierarchy of the valuation sources, as referred in IFRS 13, these derivatives are classified in level 2. The Group
resources to derivatives to hedge interest and exchange rate exposure risks. The accounting method depends on the
nature of the hedged risk, namely if the Group is exposed to fair value changes, variability in cash flows or highly
probable forecast transactions.
As allowed by IFRS 9, the Group opted to continue to apply the hedge accounting requirements in accordance with IAS
39, using mainly interest rate and exchange rate derivatives. The fair value hedge model is adopted for debt securities,
loans granted at fixed rate and money market loans and deposits, securities and combined hedge of variable rate
financial assets and fixed rate financial liabilities. The cash flows hedge model is adopted for future transactions in
foreign currency to cover dynamic changes in cash flows from loans granted and variable rate deposits in foreign
currency and foreign currency mortgage loans.
During 2022, the relationships that follow the fair value hedge model recorded ineffectiveness of a negative amount of
Euros 17,355,000 (31 December 2021: negative amount of Euros 12,521,000) and the hedging relationships that follow
the cash flows model recorded ineffectiveness of a negative amount of Euros 1,571,000 (31 December 2021: negative
amount of Euros 806,000).
During 2022, reclassifications of amounts recorded in results for fair reserves were carried out related to cash flow
hedge relationships, in a positive amount of Euros 54,861,000 (31 December 2021: positive amount of Euros
68,038,000). The accumulated adjustment on financial risks covered performed on the assets and liabilities which
includes hedged items is detailed in note 54.
The analysis of hedging derivatives portfolio, by maturity, as at 31 December 2022, is as follows:

|  |  |  |  | (Thousands of euros)
| 2022
| Notional (remaining period) | Fair value
| Up to 3 months | 3 months to 1 year | Over 1 year | Total | Assets | Liabilities
Fair value hedging derivatives related to |  |  |  |  |  |
interest rate risk changes |  |  |  |  |  |
OTC Market |  |  |  |  |  |
Interest rate swaps | 293,467 | 377,114 | 11,291,464 | 11,962,045 | 27,696 | 7,031
Fair value hedging derivatives related to |  |  |  |  |  |
currency risk changes |  |  |  |  |  |
OTC Market |  |  |  |  |  |
Currency and interest rate swap (CIRS) | 98,439 | 332,818 | — | 431,257 | 2,999 | 18,432
Cash flow hedging derivatives related to |  |  |  |  |  |
interest rate risk changes |  |  |  |  |  |
OTC Market |  |  |  |  |  |
Interest rate swaps | 240,409 | 278,751 | 14,039,978 | 14,559,138 | — | 110,562
Cash flow hedging derivatives related to |  |  |  |  |  |
currency risk changes |  |  |  |  |  |
OTC Market |  |  |  |  |  |
Currency and interest rate swap (CIRS) | 153,720 | 685,365 | 434,578 | 1,273,663 | 29,008 | 41,975
Total derivatives traded by |  |  |  |  |  |
OTC Market | 786,035 | 1,674,048 | 25,766,020 | 28,226,103 | 59,703 | 178,000

2022 REPORT & ACCOUNTS |

| 283
The analysis of hedging derivatives portfolio, by maturity, as at 31 December 2021, is as follows:

|  |  |  |  | (Thousands of euros)
| 2021
| Notional (remaining period) | Fair value
| Up to 3 months | 3 months to 1 year | Over 1 year | Total | Assets | Liabilities
Fair value hedging derivatives related to |  |  |  |  |  |
interest rate risk changes |  |  |  |  |  |
OTC Market |  |  |  |  |  |
Interest rate swaps | 342,503 | 1,076,631 | 14,045,852 | 15,464,986 | 74,261 | 28,509
Fair value hedging derivatives related to |  |  |  |  |  |
currency risk changes |  |  |  |  |  |
OTC Market |  |  |  |  |  |
Currency and interest rate swap (CIRS) | 171,466 | 175,863 | — | 347,329 | 12,043 | 121
Cash flow hedging derivatives related to |  |  |  |  |  |
interest rate risk changes |  |  |  |  |  |
OTC Market |  |  |  |  |  |
Interest rate swaps | — | 174,524 | 15,607,245 | 15,781,769 | 19,617 | 283,335
Cash flow hedging derivatives related to |  |  |  |  |  |
currency risk changes |  |  |  |  |  |
OTC Market |  |  |  |  |  |
Currency and interest rate swap (CIRS) | 210,017 | 160,365 | 1,321,143 | 1,691,525 | 3,138 | 65,008
Hedging derivatives related to |  |  |  |  |  |
net investment in foreign operations |  |  |  |  |  |
OTC Market |  |  |  |  |  |
Currency and interest rate swap | 153,427 | — | — | 153,427 | — | 233
Total derivatives traded by |  |  |  |  |  |
OTC Market | 877,413 | 1,587,383 | 30,974,240 | 33,439,036 | 109,059 | 377,206

26.Investments in associated companies
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Portuguese credit institutions | 49,228 | 40,581
Foreign credit institutions | 170,045 | 165,393
Other Portuguese companies | 115,275 | 308,937
Other foreign companies | 30,432 | 25,695
| 364,980 | 540,606
Impairment | (66,263) | (78,268)
| 298,717 | 462,338

| 2022 REPORT & ACCOUNTS

284 |
The balance Investments in associated companies, as at 31 December 2022, is analysed as follows:

|  |  | (Thousands of euros)
| 2022
| Ownership on equity | Goodwill | Impairment of investments in associated companies | Total
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. | 59,766 | — | — | 59,766
Banco Millennium Atlântico, S.A. | 74,994 | 44,186 | (48,252) | 70,928
Banque BCP, S.A.S. | 50,865 | — | — | 50,865
SIBS, S.G.P.S, S.A. | 55,509 | — | — | 55,509
Fidelidade Moçambique - Companhia de Seguros S.A. | 12,421 | — | — | 12,421
Unicre - Instituição Financeira de Crédito, S.A. | 41,793 | 7,435 | — | 49,228
Webspectator Corporation | — | 18,011 | (18,011) | —
| 295,348 | 69,632 | (66,263) | 298,717

These investments correspond to unquoted companies. According to the accounting policy described in note 1 B, these
investments are measured at the equity method.
The balance Investments in associated companies, as at 31 December 2021, is analysed as follows:

|  |  | (Thousands of euros)
| 2021
| Ownership on equity | Goodwill | Impairment of investments in associated companies | Total
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. | 261,446 | — | — | 261,446
Banco Millennium Atlântico, S.A. | 65,716 | 54,744 | (60,257) | 60,203
Banque BCP, S.A.S. | 44,933 | — | — | 44,933
SIBS, S.G.P.S, S.A. | 47,142 | — | — | 47,142
Fidelidade Moçambique - Companhia de Seguros S.A. | 7,684 | — | — | 7,684
Unicre - Instituição Financeira de Crédito, S.A. | 33,146 | 7,435 | — | 40,581
Webspectator Corporation | — | 18,011 | (18,011) | —
Others | 349 | — | — | 349
| 460,416 | 80,190 | (78,268) | 462,338

The Group's companies included in the consolidation perimeter are presented in note 59, as well as the main indicators
of the most relevant ones.
The movements occurred in Impairment of investments in associated companies are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Balance on 1 January | 78,268 | 52,559
Transfers from Other provisions (Banco Millennium Atlântico, S.A.) (note 39) | 5,000 | 22,300
Sale Cold River's Homestead, S.A. | — | (4,557)
Impairment charge for the year (note 13) | 1,435 | —
Impairment write-off (Banco Millennium Atlântico, S.A.) | (16,787) | —
Exchange rate differences | (1,653) | 7,966
Balance at the end of the year | 66,263 | 78,268

2022 REPORT & ACCOUNTS |

| 285
In accordance with the requirements of IFRS 12 and considering their relevance, the movements occurred in the
investment held in Banco Millennium Atlântico, S.A., is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Ownership held by BCP on equity of the associated company as at 1 January | 60,203 | 66,521
Application of IAS 29 for the year: |  |
Net non-monetary assets of the BMA |  |
Effect of exchange rate variations (note 43) | 1,282 | 3,332
Amortization of the effect of IAS 29 application calculated as at 31 December 2018 (note 15) | (423) | (2,388)
Goodwill of the merger operation of the BMA |  |
Effect of exchange rate variations (note 43) | 2,810 | 3,593
Transfers from Other provisions (note 39) | (5,000) | (22,300)
Appropriation of the net income of the associated companies (note 15) | 2,431 | 2,629
Appropriation of the net income of previous years (note 15) | (2,924) | (1,621)
Other comprehensive income attributable to BCP | 99 | 68
Exchange differences |  |
Effect on BMA's equity | 8,814 | 13,962
Goodwill associated with investment in BMA | 3,419 | 4,373
Impairment of investments in associated companies (note 43) | 1,653 | (7,966)
Investment held at the end of the year | 70,928 | 60,203

The following table presents the financial statements of Banco Millennium Atlântico, S.A, prepared in accordance with
IFRS, modified by the consolidation adjustments:

| (Thousands of euros)
| 2022 | 2021
Net profit for the year | 10,693 | 11,563
Comprehensive income | 435 | 299
Total comprehensive income attributable to Shareholders of the associated company | 11,128 | 11,862
Application of IAS 29 (*) | (1,861) | (10,504)
Attributable to Shareholders of the associated companies adjusted to BCP GAAP | 9,267 | 1,358
Attributable to the BCP Group | 2,107 | 309
Balance sheet |  |
Financial assets | 2,562,438 | 2,398,934
Non-financial assets | 347,632 | 313,203
Financial liabilities | (2,579,341) | (2,449,107)
Non-financial liabilities | (37,836) | 33,362
Attributable to Shareholders of the associated companies | 292,893 | 296,392
Application of IAS 29 (*) | 36,974 | 66,504
Attributable to Shareholders of the associated companies adjusted to BCP GAAP | 329,867 | 362,896
Attributable to the BCP Group | 74,994 | 82,503
Goodwill of the merge | 44,186 | 37,957
Impairment of investments in associated companies | (48,252) | (60,257)
Attributable to the BCP Group adjusted of consolidation items | 70,928 | 60,203

(*) The impact of the IAS 29 adoption was calculated from the date of the merger (April 2016).

| 2022 REPORT & ACCOUNTS

286 |
The amounts presented do not include adjustments arising from the application of IAS 29. Based on the requirements of
IAS 29, Angola was considered a hyperinflationary economy until 31 December 2018, for the purpose of presenting the
consolidated financial statements, as described in accounting policy 1 B6. This classification ceased to be applied on 1
January 2019.
In accordance with the requirements of IFRS 12 and considering their relevance, the movements occurred in the
investment held in Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Ownership held by BCP on equity of the associated company as at 1 January | 261,446 | 228,956
Appropriation of the net income of the associated company (note 15) (*) | 39,811 | 38,218
Other comprehensive income attributable to BCP | (109,240) | (5,728)
Dividends received | (132,251) | —
Investment held at the end of the year | 59,766 | 261,446

(*) Includes adjustments according to BCP GAAP.
The following table presents the financial statements of Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A.,
prepared in accordance with IFRS, modified by the consolidation adjustments:

| (Thousands of euros)
| 2022 | 2021
Net profit for the year | 74,425 | 69,900
Comprehensive income | (222,939) | (11,690)
Total comprehensive income attributable to Shareholders of the associated company | (148,514) | 58,210
Adjustments of intra-group transactions (reverse of the VOBA annual amortisation (*) | 6,822 | 8,096
Attributable to Shareholders of the associated company adjusted to BCP GAAP | (141,692) | 66,306
Attributable to the BCP Group | (69,429) | 32,490
Balance sheet |  |
Financial assets | 8,417,704 | 10,263,904
Non-financial assets | 459,055 | 429,543
Financial liabilities | (8,405,919) | (9,810,182)
Non-financial liabilities | (69,123) | (62,344)
Total equity | 401,717 | 820,921
Attributable to non-controlling interests | 10,929 | 11,718
Attributable to Shareholders of the associated companies | 390,788 | 809,203
Adjustments of intra-group transactions (reverse of the VOBA annual amortisation (*) | 362,086 | 355,263
Attributable to Shareholders of the associated company adjusted to BCP GAAP | 752,874 | 1,164,466
Attributable to the BCP Group | 368,908 | 570,588
Reverse of the initial gain in 2004 allocated to the BCP Group | (309,142) | (309,142)
Attributable to the BCP Group adjusted of consolidation items | 59,766 | 261,446

(*) VOBA corresponds to the estimated current value of the future cash flows of the contracts in force at the date of acquisition. The
value of the acquired business (VOBA) is recognised in the consolidated accounts of Millenniumbcp Ageas Grupo Segurador, S.G.P.S.,
S.A. as intangible assets and is amortised over the period of recognition of the income associated with the policies acquired.
The Group owns 49% of Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., being accounted for under the equity
method, as Investments in associated companies.
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. is dedicated to the management of life insurance and pension
funds.

2022 REPORT & ACCOUNTS |

| 287
On 1 January 2023 Millenniumbcp Ageas made the simultaneous adoption of IFRS9 - Financial Instruments and IFRS17 -
Insurance Contracts. It opted for the possibility given to Insurance Companies to defer the application of IFRS9, since
the combined implementation with IFRS17 would minimize the distortion of results.
IFRS 17 replaces IFRS 4 - "Insurance Contracts" and is applicable to all entities that issue insurance contracts,
reinsurance contracts and investment contracts with discretionary participation features if they are also issuers of
insurance contracts.
In accordance with IFRS 17, at initial recognition, Millenniumbcp Ageas Grupo Segurador has identified the contracts
that are subject to similar risks and that are managed together, being aggregated in portfolios. For measurement
purposes, further divides portfolios of insurance contracts into groups of insurance contracts. A group of insurance
contracts is determined by first dividing the portfolio of insurance contracts into annual cohorts. Each annual cohort is
then further divided in the following groups: i) group of contracts that are onerous at initial recognition; ii) group of
contracts that at initial recognition have no significant possibility of becoming onerous subsequently; and iii) a group of
the remaining contracts in the portfolio.
Insurance contracts are now measured using estimates and updated assumptions that reflect the timing of cash flows
discounted and any uncertainty related to insurance contracts. Income is now recognized as it provides insurance
services (rather than when it receives premiums) provide information on the insurance contract earnings that it expects
to recognize in the future.
In the measurement of insurance contracts, Millenniumbcp Ageas Grupo Segurador has opted for two measurement
methods: i) Premium allocation approach ("PAA") for contracts with duration equal to or less than one year and ii)
General measurement model measurement model ("GMM") for the remaining contracts.
Initial application of IFRS 17 and IFRS 9 requires comparative information. Therefore, Millenniumbcp Ageas Grupo
Segurador made the transition exercise on 1 January 2022. The estimated impacts of the transition to IFRS 17 represent
a reduction in the Equity of Millenniumbcp Ageas Grupo Segurador, partially offset by the positive impact resulting from
the adoption of IFRS9.
IFRS 17 is retrospective with exemptions provided for the transition date. These exemptions are related to the
impracticability and complexity involved e.g. in calculating the liability, the current service margin ("CSM"), loss
component, or other comprehensive income ("OCI option") at transition date. When impracticable, the standard
provides for the use of the Modified Retrospective Approach or the Fair Value Approach. Millenniumbcp Ageas Grupo
Segurador, for contracts prior to 2018 adopted the fair value and for contracts after 2018 the full retrospective
approach.
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., ('Millenniumbcp Ageas' or 'Group'), is owned by Ageas Insurance
International, N.V. (51%), through Ageas Portugal Holdings S.G.P.S., S.A. (51%), and by Banco Comercial Português, S.A.
(49%).
27.Non-current assets held for sale
This balance is analysed as follows:

|  |  |  |  | (Thousands of euros)
| 2022 | 2021
| Gross value | Impairment | Net value | Gross value | Impairment | Net value
Real estate |  |  |  |  |  |
Assets arising from recovered loans | 326,577 | (90,699) | 235,878 | 630,082 | (127,218) | 502,864
Assets belong to investments funds and real estate companies | 266,544 | (46,497) | 220,047 | 279,071 | (50,481) | 228,590
Assets for own use (closed branches) | 20,556 | (6,626) | 13,930 | 22,800 | (5,939) | 16,861
Equipment and other | 22,117 | (5,743) | 16,374 | 24,421 | (7,076) | 17,345
Other assets | 12,806 | — | 12,806 | 14,854 | — | 14,854
| 648,600 | (149,565) | 499,035 | 971,228 | (190,714) | 780,514

The assets included in this balance are accounted for in accordance with the accounting policy described in note 1 G.

| 2022 REPORT & ACCOUNTS

288 |
The balance Real estate - Assets arising from recovered loans includes, essentially, real estate resulted from process of
recovered loans or judicial auction being accounted for at the time the Group assumes control of the asset, which is
usually associated with the transfer of their legal ownership. Additional information on these assets is presented in note
54.
The Group has a strategy for sale these assets, consistent with the characteristic of each asset as well as with the
breakdown of underlying valuations. However, considering the formal constraints, it was not possible in all instances to
conclude the sales in the expected time. The sale strategy is based in an active search of buyers, with the Group having
a website where advertises these properties and through partnerships with the mediation of companies having more
ability for the product that each time the Group has for sale. Prices are periodically reviewed and adjusted for
continuous adaptation to the market. The Group requests, regularly, to the European Central Bank, the extension of
the period of holding these properties.
This balance includes properties for which the Group has already entered sales contracts in the gross amount of Euros
97,975,000 (31 December 2021: Euros 62,181,000), of which Euros 70,169,000 (31 December 2021: Euros 0) were
related to properties held by investment funds. The impairment associated with these contracts amounts to Euros
11,296,000 (31 December 2021: Euros 14,651,000), of which Euros 6,059,000 (31 December 2021: Euros 0) were related
to properties held by investment funds and it was calculated considering the value of the respective contracts.
The changes occurred in Impairment of non-current assets held for sale are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Balance on 1 January | 190,714 | 215,649
Transfers | — | (2,135)
Charge for the year (note 13) | 78,318 | 56,863
Reversals for the year (note 13) | (1,116) | (3,684)
Amounts charged-off | (119,073) | (77,610)
Exchange rate differences | 722 | 1,631
Balance at the end of the year | 149,565 | 190,714

28.Investment property
As at 31 December 2022, the balance Investment property corresponds to real estate evaluated in accordance with the
accounting policy presented in note 1 N, based on independent assessments and compliance with legal requirements.
In 2022, the rents received related to these assets amounted to Euros 209,000 (2021: Euros 277,000). In 2021 the
maintenance expenses related to rented or not rented real estate, amounted to Euros 73,000.
The changes occurred in this balance are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Balance on 1 January | 2,870 | 7,909
Transfers from / (to) non-current assets held for sale | 12,532 | —
Revaluations | (185) | (1,108)
Disposals | — | (3,931)
Balance at the end of the year | 15,217 | 2,870

2022 REPORT & ACCOUNTS |

| 289
29.Other tangible assets
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Real estate | 670,000 | 708,803
Equipment |  |
Computer equipment | 334,864 | 337,457
Security equipment | 67,687 | 67,542
Interior installations | 149,986 | 148,532
Machinery | 47,283 | 49,455
Furniture | 84,516 | 84,923
Motor vehicles | 32,529 | 29,703
Other equipment | 28,224 | 30,711
Right of use |  |
Real estate | 366,363 | 352,346
Vehicles and equipment | 431 | 505
Work in progress | 21,279 | 20,656
Other tangible assets | 39 | 38
| 1,803,201 | 1,830,671
Accumulated depreciation |  |
Relative to the current year (note 9) | (98,916) | (98,972)
Relative to the previous years | (1,129,588) | (1,130,978)
| (1,228,504) | (1,229,950)
| 574,697 | 600,721

The balance Real Estate includes the amount of Euros 108,616,000 (31 December 2021: Euros 113,850,000) related to
real estate held by the Group's real estate investment funds.
The balance Right-of-use essentially corresponds to real estate (branches and central buildings) and to a residual
number of vehicles, which are amortized according to the lease term of each contract, as described in the accounting
policy 1 H.

| 2022 REPORT & ACCOUNTS

290 |
The changes occurred in Other tangible assets during 2022 are analysed as follows:

|  |  |  |  | (Thousands of euros)
| 2022
| Balance on 1 January | Acquisitions / Charge | Disposals / Charged-off | Transfers | Exchange differences | Balance on 31 December
Real estate | 708,803 | 2,442 | (37,606) | (6,690) | 3,051 | 670,000
Equipment: |  |  |  |  |  |
Computer equipment | 337,457 | 15,238 | (31,600) | 12,186 | 1,583 | 334,864
Security equipment | 67,542 | 844 | (1,372) | 382 | 291 | 67,687
Interior installations | 148,532 | 1,339 | (1,880) | 1,198 | 797 | 149,986
Machinery | 49,455 | 611 | (2,068) | (380) | (335) | 47,283
Furniture | 84,923 | 440 | (3,583) | 2,371 | 365 | 84,516
Motor vehicles | 29,703 | 7,033 | (4,869) | 306 | 356 | 32,529
Other equipment | 30,711 | 180 | (2,223) | 107 | (551) | 28,224
Right of use |  |  |  |  |  |
Real estate | 352,346 | 35,010 | (20,114) | (8) | (871) | 366,363
Vehicles and equipment | 505 | — | (65) | — | (9) | 431
Work in progress | 20,656 | 24,408 | (1,133) | (22,808) | 156 | 21,279
Other tangible assets | 38 | — | — | — | 1 | 39
| 1,830,671 | 87,545 | (106,513) | (13,336) | 4,834 | 1,803,201
Accumulated depreciation |  |  |  |  |  |
Real estate | (428,656) | (14,917) | 31,982 | 5,702 | (176) | (406,065)
Equipment: |  |  |  |  |  |
Computer equipment | (300,560) | (16,375) | 31,432 | (116) | (1,359) | (286,978)
Security equipment | (63,723) | (862) | 1,337 | 152 | (254) | (63,350)
Interior installations | (131,897) | (3,007) | 1,828 | 446 | (524) | (133,154)
Machinery | (41,681) | (1,535) | 1,997 | 1,427 | 268 | (39,524)
Furniture | (78,344) | (2,717) | 3,543 | (1,232) | (257) | (79,007)
Motor vehicles | (17,743) | (4,636) | 4,189 | (53) | (214) | (18,457)
Other equipment | (23,811) | (1,498) | 2,222 | 12 | 415 | (22,660)
Right of use |  |  |  |  |  |
Real estate | (142,996) | (53,365) | 17,094 | 1 | 427 | (178,839)
Vehicles and equipment | (501) | (4) | 65 | — | 9 | (431)
Other tangible assets | (38) | — | — | — | (1) | (39)
| (1,229,950) | (98,916) | 95,689 | 6,339 | (1,666) | (1,228,504)
| 600,721 | (11,371) | (10,824) | (6,997) | 3,168 | 574,697

2022 REPORT & ACCOUNTS |

| 291
The changes occurred in Other tangible assets during 2021 are analysed as follows:

|  |  |  |  | (Thousands of euros)
| 2021
| Balance on 1 January | Acquisitions / Charge | Disposals / Charged-off | Transfers | Exchange differences | Balance on 31 December
Real estate | 725,639 | 990 | (29,510) | (2,200) | 13,884 | 708,803
Equipment: |  |  |  |  |  |
Computer equipment | 330,853 | 7,011 | (12,828) | 5,915 | 6,506 | 337,457
Security equipment | 69,812 | 403 | (3,413) | (136) | 876 | 67,542
Interior installations | 144,693 | 1,275 | (1,243) | 1,446 | 2,361 | 148,532
Machinery | 49,452 | 369 | (1,670) | 984 | 320 | 49,455
Furniture | 84,962 | 448 | (2,097) | 534 | 1,076 | 84,923
Motor vehicles | 29,448 | 4,375 | (6,087) | 432 | 1,535 | 29,703
Other equipment | 30,886 | 18 | (1,168) | 1,045 | (70) | 30,711
Right of use |  |  |  |  |  |
Real estate | 334,608 | 35,024 | (19,979) | — | 2,693 | 352,346
Vehicles and equipment | 929 | 14 | (436) | — | (2) | 505
Work in progress | 18,021 | 15,792 | (128) | (13,860) | 831 | 20,656
Other tangible assets | 248 | 2 | (252) | — | 40 | 38
| 1,819,551 | 65,721 | (78,811) | (5,840) | 30,050 | 1,830,671
Accumulated depreciation |  |  |  |  |  |
Real estate | (431,312) | (14,945) | 18,823 | 2,589 | (3,811) | (428,656)
Equipment: |  |  |  |  |  |
Computer equipment | (291,414) | (16,606) | 12,505 | (34) | (5,011) | (300,560)
Security equipment | (65,662) | (864) | 3,413 | 136 | (746) | (63,723)
Interior installations | (128,864) | (2,726) | 1,041 | 155 | (1,503) | (131,897)
Machinery | (41,333) | (1,294) | 1,425 | (253) | (226) | (41,681)
Furniture | (77,162) | (2,781) | 1,958 | 376 | (735) | (78,344)
Motor vehicles | (17,215) | (4,353) | 4,850 | (20) | (1,005) | (17,743)
Other equipment | (23,586) | (1,497) | 1,073 | 179 | 20 | (23,811)
Right of use |  |  |  |  |  |
Real estate | (101,475) | (53,799) | 13,302 | — | (1,024) | (142,996)
Vehicles and equipment | (668) | (107) | 272 | — | 2 | (501)
Other tangible assets | (35) | — | 1 | — | (4) | (38)
| (1,178,726) | (98,972) | 58,663 | 3,128 | (14,043) | (1,229,950)
| 640,825 | (33,251) | (20,148) | (2,712) | 16,007 | 600,721

| 2022 REPORT & ACCOUNTS

292 |
30.Goodwill and intangible assets
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Goodwill - Differences arising on consolidation |  |
Bank Millennium, S.A. (Poland) | 102,655 | 104,843
Euro Bank, S.A. (Poland) | 41,038 | 41,913
Others | 10,182 | 12,675
| 153,875 | 159,431
Impairment |  |
Bank Millennium, S.A. (Poland) | (102,655) | —
Others | (9,880) | (11,931)
| (112,535) | (11,931)
| 41,340 | 147,500
Intangible assets |  |
Software | 277,205 | 234,192
Other intangible assets | 73,607 | 70,823
| 350,812 | 305,015
Accumulated amortisation |  |
Charge for the year (note 9) | (40,334) | (38,184)
Charge for the previous years | (169,131) | (158,118)
| (209,465) | (196,302)
| 141,347 | 108,713
| 182,687 | 256,213

According to the accounting policy described in note 1 B, the recoverable amount of the Goodwill is annually assessed
in the second half of each year or whenever there are indications of eventual loss of value. In accordance with IAS 36
the recoverable amount of goodwill resulting from the consolidation of the subsidiaries, should be the greater between
its value in use (the present value of the future cash flows expected from its use) and its fair value less costs to sell.
Based on these criteria, the Group made in 2022, valuations of their investments for which there is goodwill recognised
considering among other factors:
(i) an estimate of future cash flows generated by each cash generating unit;
(ii) an expectation of potential changes in the amounts and timing of cash flows;
(iii) the time value of money;
(iv) a risk premium associated with the uncertainty by holding the asset; and
(v) other factors associated with the current situation of financial markets.
The valuations are based on reasonable and sustainable assumptions representing the best estimate of the Executive
Committee on the economic conditions that affect each subsidiary, the budgets and the latest projections approved for
those subsidiaries and their extrapolation to future periods. The assumptions made for these valuations might vary with
the change in economic conditions and in the market.
In 2022, there were no factors pointing to the deterioration of the value of those financial participations that could
lead to impairment charges in respect of goodwill, nor to the improvement of the value of those financial participations
that could lead to a reversion of previously booked impairments to the goodwill, except in the case of Bank Millennium
S.A. (Poland), in which case factors were identified during 2022 that showed a deterioration in the value of this
financial participation, which led to a total impairment of the goodwill then associated with the acquisition by the BCP
Group of the percentage of control over Bank Millennium S.A. (Poland) in the amount of Euros 102.3 million in the first
half of 2022.

2022 REPORT & ACCOUNTS |

| 293
Bank Millennium, S.A. (Poland)
The valuation exercises as of the end of 2021 and as of the end of the first half of 2022 considered as estimated cash
flows of the business the ones projected based on current operating results and assuming the business plan and
projections approved at the end of 2021 by the Executive Committee up to 2026. After that date, a perpetuity was
considered based on the average long-term expected adjusted rate of return for this activity in the Polish market.
Additionally, the market performance of Bank Millennium, S.A. in the Polish capital market was taken into
consideration (closing price of 8.195 PLN per share as at the end of 2021 and 3.886 PLN per share as at the end of the
first half of 2022) and the direct percentage of shareholding.
The above-mentioned business plan of Bank Millennium, S.A. covered a five-year period, from 2022 to 2026,
considering, along this period, an estimated compound annual growth rate of 7.0% (6.2% in 2020) for Total Assets and of
19.6% (8.4% in 2020) for Total Equity, while considering a ROE evolution from -8.0% by the end of 2022 to 17.6% by the
end of 2026 and 12.5% in perpetuity vs. an estimated evolution of 2.9% by the end of 2021 to 9.2% by the end of 2025
and 11.0% in perpetuity considered in 2020.
In the valuation exercise performed at year-end 2021, the exchange rate EUR/PLN considered was 4.5839 as at 31
December 2021. The Cost of Equity considered was 11.000% for the period 2022 to 2026 and in perpetuity, whereas
2020 exercise considered a Cost of Equity of 8.875% for the period 2021 to 2025 and in perpetuity, and, in both years, a
discretionary factor was considered to accommodate the uncertainty regarding the legal risk associated with the
mortgage loan portfolio in foreign currency to the PLN. The annual growth rate in perpetuity (g) was 2.88%.
Together with the business plans, other main assumptions considered for the impairment test were:

| 2021 | 2020 | 2019
Discount rate | 11% | 8.875% | 8.565%
Growth rate (g) | 2.88% | 2.37% | 2.8%
RoE steady state – Discount rate | 1.5% | 2.125% | 1.935%

During the first half of 2022, there was an increase of the Cost of Equity to 16.05% (11% at the end of 2021), essentially
as a result of the increase of the risk-free interest rates and of the reference interest rates for the Polish economy,
together with the increase of the discretionary adjustment to the Cost of Equity that had been considered at the end
of 2021(to also accommodate the regulatory and legislative risk associated with potential new measures to support
mortgage borrowers in local currency, on top of those already communicated to the market, and the possible creation
of funds to support borrowers in difficulties associated with increasing inflation and interest rates). Additionally, there
was a devaluation of the EUR/PLN exchange rate (4.6974 PLN at the end of June 2022 vs. 4.5839 as at 31 December
2021).
Given the degree of uncertainty in these assumptions, and in order to validate whether the recoverable amount of
goodwill resulting from the consolidation of Bank Millennium, S.A., corresponding to the higher of its value in use or its
fair value less costs to sell, equals to or exceeds the registered goodwill, the Group performs a sensitivity analysis using
reasonable changes in the key assumptions whose volatility are perceived to possibly have a greater impact in
determining the present value of the estimated cash flows. Below, in a simplified way, is shown the increase/decrease
amount of the estimated value for 100% of Bank Millennium, S.A., that results from a reasonable variation (+/- 50 basis
points) of each of the key assumptions considered as at 30 June 2022.
Sensitivity analysis for main assumptions

|  | (Million euros)
| Impact increase of 50 bps | Impact decrease of 50 bps
Discount rate | (99) | 107
Growth rate (g) | 17 | (16)
RoE steady state | 61 | (61)

Despite the increase of the Cost of Equity and the negative deviation in shareholders' equity in the first half of 2022,
Bank Millennium S.A. (Poland) continued to deliver its Business Plan and projections with regard to operational
performance.

| 2022 REPORT & ACCOUNTS

294 |
Notwithstanding the good operating performance of Bank Millennium S.A. (Poland), the expected effect that the
increase in reference interest rates has on the prospective evolution of net interest income and the fact that Bank
Millennium S.A. (Poland) continues to assess that the goodwill associated with the consumer credit business acquired
from EuroBank (40.9 million euros as at June 2022) is recoverable, given i) the sensitivity of the estimated value of the
Business Plan capitalized from end of 2021 to June 2022 to the main assumptions considered, ii) the variation of the
Shareholder’s Equity in the first semester of 2022 when compared to the budgeted one, iii) the uncertainty associated
with the material impacts on the Business Plan and projections arising from potential regulatory and legislative
measures and those then communicated to the market, and iv) that the subsequent value estimate results in an
impairment amount proximate to the goodwill associated with the acquisition by the BCP Group of the current
percentage of control over Bank Millennium S.A. (Poland) in the amount of 102.3 million euros as at 30 June 2022, the
Executive Committee deemed it prudent to consider the total impairment of the goodwill then associated with the
acquisition by the BCP Group of the current percentage of control over Bank Millennium S.A. (Poland) in the amount of
Euros 102.3 million as at 30 June 2022.
The changes occurred in Goodwill and intangible assets, during 2022, are analysed as follows:

|  |  |  |  | (Thousands of euros)
| 2022
| Balance on 1 January | Acquisitions / Charge | Disposals / Charged-off | Transfers | Exchange differences | Balance on 31 December
Goodwill - Differences arising |  |  |  |  |  |
on consolidation | 159,431 | — | (2,512) | — | (3,044) | 153,875
Impairment for goodwill | (11,931) | (102,770) | 2,512 | — | (346) | (112,535)
| 147,500 | (102,770) | — | — | (3,390) | 41,340
Intangible assets |  |  |  |  |  |
Software | 234,192 | 72,441 | (25,315) | (3,664) | (449) | 277,205
Other intangible assets | 70,823 | 1,213 | (1,037) | 4,073 | (1,465) | 73,607
| 305,015 | 73,654 | (26,352) | 409 | (1,914) | 350,812
Accumulated depreciation |  |  |  |  |  |
Software | (136,360) | (36,168) | 24,859 | 419 | 451 | (146,799)
Other intangible assets | (59,942) | (4,166) | 1,027 | (828) | 1,239 | (62,670)
| (196,302) | (40,334) | 25,886 | (409) | 1,690 | (209,469)
| 108,713 | 33,320 | (466) | — | (224) | 141,343
| 256,213 | (69,450) | (466) | — | (3,614) | 182,683

The changes occurred in Goodwill and intangible assets during 2021 are analysed as follows:

|  |  |  |  | (Thousands of euros)
| 2021
| Balance on 1 January | Acquisitions / Charge | Disposals / Charged-off | Transfers | Exchange differences | Balance on 31 December
Goodwill - Differences arising |  |  |  |  |  |
on consolidation | 161,775 | 347 | (3,558) | — | 867 | 159,431
Impairment for goodwill | (13,573) | (347) | 1,989 | — | — | (11,931)
| 148,202 | — | (1,569) | — | 867 | 147,500
Intangible assets |  |  |  |  |  |
Software | 201,918 | 49,781 | (17,616) | (3,826) | 3,935 | 234,192
Other intangible assets | 67,777 | — | (341) | 3,746 | (359) | 70,823
| 269,695 | 49,781 | (17,957) | (80) | 3,576 | 305,015
Accumulated depreciation |  |  |  |  |  |
Software | (115,427) | (34,173) | 15,543 | 57 | (2,360) | (136,360)
Other intangible assets | (56,516) | (4,011) | 341 | (57) | 301 | (59,942)
| (171,943) | (38,184) | 15,884 | — | (2,059) | (196,302)
| 97,752 | 11,597 | (2,073) | (80) | 1,517 | 108,713
| 245,954 | 11,597 | (3,642) | (80) | 2,384 | 256,213

2022 REPORT & ACCOUNTS |

| 295
31.Income tax
The deferred income tax assets and liabilities are analysed as follows:

|  |  |  |  | (Thousands of euros)
| 2022 | 2021
| Assets | Liabilities | Net | Assets | Liabilities | Net
Deferred taxes not depending |  |  |  |  |  |
on the future profits (a) |  |  |  |  |  |
Impairment losses (b) | 982,465 | — | 982,465 | 983,177 | — | 983,177
Employee benefits | 835,619 | — | 835,619 | 835,619 | — | 835,619
| 1,818,084 | — | 1,818,084 | 1,818,796 | — | 1,818,796
Deferred taxes depending |  |  |  |  |  |
on the future profits |  |  |  |  |  |
Impairment losses (b) | 438,430 | (50,303) | 388,127 | 601,925 | (50,303) | 551,622
Tax losses carried forward | 188,693 | — | 188,693 | 187,475 | — | 187,475
Employee benefits | 50,770 | (136,019) | (85,249) | 55,274 | (6,918) | 48,356
Financial assets at fair value through other comprehensive income | 729,416 | (134,154) | 595,262 | 125,907 | (104,865) | 21,042
Derivatives | — | (5,482) | (5,482) | — | (4,923) | (4,923)
Intangible assets | 1,143 | — | 1,143 | 1,639 | — | 1,639
Other tangible assets | 8,693 | (3,380) | 5,313 | 8,835 | (4,037) | 4,798
Others | 111,336 | (89,949) | 21,387 | 123,468 | (80,989) | 42,479
| 1,528,481 | (419,287) | 1,109,194 | 1,104,523 | (252,035) | 852,488
Total deferred taxes | 3,346,565 | (419,287) | 2,927,278 | 2,923,319 | (252,035) | 2,671,284
Offset between deferred tax assets |  |  |  |  |  |
and deferred tax liabilities | (407,579) | 407,579 | — | (235,103) | 235,103 | —
Net deferred taxes | 2,938,986 | (11,708) | 2,927,278 | 2,688,216 | (16,932) | 2,671,284

(a) Special Regime applicable to deferred tax assets
(b) The amounts as at 31 December 2022 and 2021 include deferred tax assets related with credit impairments non-accepted fiscally
of which credits were written-off, according to the expectation that the use of such impairments will be deductible for the purposes
of determining taxable income for the tax periods in which the legal conditions required for their tax deductibility are met.
As at 31 December 2022, the balance deferred tax assets amounts to Euros 2,938,986,000, of which Euros 2,750,881,000
are related to the Bank's activity. The deferred taxes assets relating to the individual activity include a net amount of
Euros 532,498,000 resulting from potential losses on derivatives of hedging cash flows from interest rate risk recognized
in other comprehensive income, whose average maturity of operations is four years and Euros 400,330,000 which
depends on the existence of future profitable profits (deferred tax assets not eligible under the special regime
applicable to deferred tax assets, approved by Law No. 61/2014, of 26 August), including:
- Euros 259,983,000 (net value) related to impairment losses; and
- Euros 162,400,000 resulting from tax losses carried forward from 2016 and 2020.

| 2022 REPORT & ACCOUNTS

296 |
Special regime applicable to deferred tax assets
The Extraordinary General Meeting of the Bank that took place on 15 October 2014 approved the Bank's accession to the
Special Regime approved by Law No. 61/2014, of 26 August, applicable to deferred tax assets that resulted from not
deduction of expenses and negative equity variations with impairment losses on credits and post-employment or long-
term employee benefits.
The special regime is applicable to those expenses and negative equity variations recorded in tax periods beginning on
or after 1 January 2015, as well as to deferred tax assets recorded in the annual accounts for the last tax period prior
to that date and to part of expenses and negative equity variations associated with them. Pursuant to Law No. 23/2016,
of 19 August, this special regime is not applicable to expenses and negative equity variations with impairment losses on
credits and with post-employment or long-term employee benefits recorded in the period's taxation commencing on or
after 1 January 2016, nor to deferred tax assets to these associates.
The special regime applicable to deferred tax assets provides for an optional framework and with the possibility of
subsequent waiver, under which:
- Expenses and negative equity variations with impairment losses on credits and with post-employment or long-term
employee benefits covered by it are deducted, under the terms and conditions set out in the IRC Code and in relevant
separate tax legislation, up to the limit of the taxable profit for the tax period determined before these deductions.
Expenses and negative equity variations not deducted because of applying this limit are deducted in subsequent tax
periods, with the same limit. In the BCP Group, deferred tax assets associated with expenses and negative equity
variations under these conditions amount to Euros 1,599,199,000 (31 December 2021: Euros 1,569,265,000).
- In certain situations (those with negative net results in annual individual accounts or liquidation by voluntary
dissolution, insolvency decreed by court or revocation of the respective authorization), deferred tax assets covered by
the Special Regime are converted into tax credits, in part or in wholeness. In situations of negative net income, the
conversion is made according to the proportion between the amount of the negative net income for the period and the
total of equity capital, and a special reserve corresponding to 110% of the tax credit must be constituted and,
simultaneously, conversion rights attributable to the State of equivalent value, rights that can be acquired by the
shareholders upon payment to the State of the same value. Tax credits may be offset against tax debts of the
beneficiaries (or an entity based in Portugal within the same prudential consolidation perimeter or included in the same
group of entities for which are applied the Special Tax Regime for Groups of Companies) or reimbursed by the State.
Pursuant to the regime described, the recovery of deferred tax assets covered by the optional regime approved by Law
No. 61/2014, of 26 August, is not dependent on future profits.
The above-mentioned legal framework was densified by Ordinance no. 259/2016, of 4 October, about the control and
use of tax credits, and by the Ordinance No. 293-A/2016, of 18 November, which establishes the conditions and
procedures for the acquisition by the shareholders of the referred rights of the State. Law No. 98/2019, of 4
September, establishes a deadline for the acquisition of the referred rights of the State by the shareholders, after
which the Management Board of the issuing bank is obliged to promote the record of the capital increase by the amount
resulting from the exercise of the conversion rights. According to this legislation, among other aspects, these rights are
subject to a right of acquisition by the shareholders on the date of creation of the rights of the State, exercisable in
periods that will be established by the Board of Directors until 3 years after the confirmation date of the conversion of
the deferred tax asset into tax credit by the Portuguese Tax and Customs Authority. The issuing entity shall deposit in
favour of the State the amount of the price corresponding to all the rights issued, within 3 months beginning from the
confirmation date of the conversion of the deferred tax asset into tax credit. Such deposit shall be redeemed when and
to the extent that the rights of the State are acquired by the shareholders or exercised by the State.
Deferred taxes are calculated based on the tax rates expected to be in force when the temporary differences are
reversed, which correspond to the approved rates or substantially approved at the balance sheet date. The deferred
tax assets and liabilities are presented on a net basis whenever, in accordance with applicable law, current tax assets
and current tax liabilities can be offset with each other, and the deferred tax assets and liabilities related to income
taxes levied by the same fiscal authority over the same taxable entity.

2022 REPORT & ACCOUNTS |

| 297
The current tax rate for Banco Comercial Português, S.A. is analysed as follows:

| 2022 | 2021
Income tax | 21% | 21%
Municipal surtax rate (on taxable net income) | 1.5% | 1.5%
State tax rate (on taxable net income) |  |
More than 1,500,000 to 7,500,000 | 3% | 3%
From more than 7,500,000 to 35,000,000 | 5% | 5%
More than 35,000,000 | 9% | 9%

The deferred tax rate related to the Bank’s tax losses is 21%, in 2022 and 2021.
The average deferred tax rate associated with temporary differences of Banco Comercial Português, S.A. is 31.3%. The
income tax rate in the other main countries where the Group operates is 19% in Poland, 32% in Mozambique and 0%
(exemption) in the Cayman Islands.
Following the amendments provided for in Law No. 24-D/2022, of 30 December, within the scope of the State Budget
for 2023, the time limit applicable to the carrying forward of tax losses in Portugal was eliminated. This amendment
applies to tax losses calculated in tax periods beginning on or after 1 January 2023, as well as to tax losses calculated in
tax periods prior to 1 January 2023 and whose deduction period is still in progress on that date. Thus, tax losses
calculated in 2014 and subsequent years may be deducted from future taxable income. The deduction limit for tax
losses increased from 70% to 65%, being increased by ten percentage points when the difference results from the
deduction of tax losses calculated in the 2020 and 2021 tax periods, under the terms of the special regime provided for
in Law n. 27-A/2020, of 24 July.
The reporting period for tax losses carried forward in Poland and in Mozambique it is 5 years.
Banco Comercial Português, S.A. applies the Special Tax Regime for Groups of Companies (RETGS) since 2016 for
taxation purposes under IRC, in which it’s the dominant company. The remaining companies covered by the RETGS are
Banco ActivoBank, S.A., Interfundos - Sociedade Gestora de Organismos de Investimento Coletivo, S.A. , BCP África,
S.G.P.S. Lda., Millennium bcp Participações, S.G.P.S., Sociedade Unipessoal Lda. and Millennium bcp Teleserviços –
Serviços de Comércio Electrónico, S.A. In 2022 and 2021, the application of RETGS was maintained.
The Group's taxable profit is calculated by the algebraic sum of the individual taxable profits and tax losses of the
companies that comprise it. Income tax is calculated and registered, on an individual basis, in each of the Companies
that make up the RETGS as if the regime were not applicable. The effect of the offset between taxable income and tax
losses is reflected in the company that calculates tax losses.
The balance of Deferred tax assets not depending on the future profits (covered by the regime approved by Law no.
61/2014, of 26 August) includes the amounts of Euros 210,686,000 and Euros 4,020,000 recorded in 2015 and 2016,
respectively, related to expenses and negative equity variations with post-employment or long-term employee benefits
and to impairment losses in loans accounted until 31 December 2014.
Following the publication of the Notice of Bank of Portugal No. 5/2015, the entities that presented their financial
statements in Adjusted Accounting Standards issued by the Bank of Portugal (NCA), since 1 January 2016 began to apply
the International Financial Reporting Standards as adopted in the European Union, including, among others, the Bank's
individual financial statements.
As a result of this change, in the Bank's individual financial statements, the loans portfolio, guarantees provided and
other operations of a similar nature became subject to impairment losses calculated in accordance with the
requirements of International Accounting Standards (IAS 39 until 31 December 2017 and IFRS 9 since 1 January 2018),
replacing the registration of provisions for specific risk, for general credit risks and for country risk, in accordance with
Bank of Portugal’s Notice No. 3/95.

| 2022 REPORT & ACCOUNTS

298 |
The Regulatory Decrees No. 5/2016, of 18 November, No. 11/2017, of 28 December, and No. 13/2018, of 28 December,
established the maximum limits of impairment losses and other corrections of value for specific credit risk that are
deductible for the purpose of calculating the taxable profit under IRC in 2016, 2017 and 2018, respectively. These
Decrees declare that Bank of Portugal Notice No. 3/95 (Notice that was relevant for determining provisions for credit in
the financial statements presented on an NCA basis) should be considered for the purpose of calculating the maximum
limits of impairment losses accepted for tax purposes in 2016, 2017 and 2018, respectively.
In calculating the taxable income for the year 2021, the maintenance of the tax rules in force until 2018 was
considered. In 2022, Banco Comercial Português, S.A. and Banco ActivoBank, S.A. exercised the option to apply the
regime introduced by Law No. 98/2019, of September 4, under which impairment losses for credit risk relating to
exposures analysed on an individual basis or on a collective basis recognised under the terms of the applicable
accounting and regulatory standards and the rules in force until 2018 for the balance of impairment losses and other
value corrections for specific credit risk recorded until 31 December 2021 are maintained.
The Group complies with the guidelines of IFRIC 23 - Uncertainty over Income Tax Treatments on the determination of
taxable profit, tax bases, tax losses to be reported, tax credits to be used and tax rates in scenarios of uncertainty
regarding the income tax treatment, not having occurred material impact on the financial statements resulting from its
application.
Analysis of the recoverability of deferred tax assets
In accordance with the accounting policy 1 Y.3 and with the requirements of IAS 12, the deferred tax assets were
recognised based on the Group's expectation of their recoverability. The recoverability of deferred taxes depends on
the implementation of the strategy of the Bank's Board of Directors, namely the generation of estimated taxable
income and its interpretation of tax legislation. Any changes in the assumptions used in estimating future profits or tax
legislation may have material impacts on deferred tax assets.
The assessment of the recoverability of deferred taxes assets is based on the projection of results for the period
between 2023 and 2032. The projected results before taxes for the years 2023, 2024 and 2025 are consistent with the
budget approved by the Board of Directors of the Bank in December 2022, which incorporates the priorities arising from
the Strategic Plan 2021-2024.
The abandonment of negative interest rates, which imposed a burden on banks, is favourably reflected in projected
profitability and convergence towards medium/long-term metrics and trends consistent with commercial positioning
and the coveted capture of efficiency gains, established in the review of the 2021-2024 Strategic Plan approved by the
corporate bodies, highlighting:
- the improvement in net interest income, which mainly reflects the referred increase in market interest rates and also
benefits from the preserving of the deposit base, the effort to grow credit and also the reinvestment of assets at the
new interest rates;
- the increase in commission income based on efficient and judicious management of commissioning and pricing
- the reduction of the cost of risk for levels in line with the Bank's current activity, with a lesser impact from the
historical portfolios of NPE, foreclosed assets and FRE (Corporate Restructuring Funds), consolidated the reduction of
these exposures achieved over the last years;
- capturing efficiency gains enhanced by digitalization, reflected in the control of operating costs, after the staff
reduction carried out in 2021.

2022 REPORT & ACCOUNTS |

| 299
To estimate taxable net income for the periods of 2023 to 2032, the following main assumptions were considered:
- The rules of the new tax regime of credit impairment were applied. In the application of these rules, the following
assumptions were considered, in general terms:
a) the impairment losses for credit risk relating to exposures analysed on an individual or collective basis, recognised
in accordance with the applicable accounting and regulatory standards, were considered deductible for tax purposes;
b) impairment reversals created until 31 December 2021 not accepted for tax purposes were estimated based on the
Reduction Plan of Non-Performing Assets 2022-2024 submitted to the supervisory authority in March 2022, and also on
the average reversal percentage observed in the last years of 2016 to 2022;
c) the referred average percentages were calculated separately, according to the presence or not of a mortgage
security, the eligibility for the special regime applicable to deferred tax assets and according to the clients’ rating as
Non-Performing Exposures (NPE).
- The deductions related to impairment of financial assets were projected based on the destination (sale or settlement)
and the estimated date of the respective operations;
- Reversals of impairment of non-financial assets not accepted for tax purposes were projected considering the
expected periods of disinvestment in certain real estate. For the remaining assets without a forecasted term for
disinvestment, the reversals were estimated based on the average percentage of reversal observed in the years from
2016 to 2022. Non-deductible expenses related to the reinforcement of impairment of non-financial assets were
estimated on the based on the average percentage of amounts not deducted for tax purposes in the years from 2016 to
2022, compared to the amounts of reinforcements net of impairment recorded in those years.
- The deductions related to employee benefits were projected based on their estimated payments or deduction plans,
in accordance with information provided by the actuary of the pension fund.
- The realization of changes in the fair value of real estate investment funds was projected based on the information
available in the management agreements of the funds in question for the period expected for the respective
liquidation.
According to the estimate of future taxable income, the deferred taxes assets recorded as at 31 December 2022 are
adequate under the IAS 12 requirements.
In accordance with these assessments, the amount of unrecognised deferred tax related to tax losses, by year of origin
is as follows:

| (Thousands of euros)
Tax losses carried forward | 2022 | 2021
2014 | 161,895 | 160,206
2015 | 2 | 269
2016 | 286,419 | 286,422
2017 | 2,303 | 2,309
2018 | 108,234 | 108,261
2019 | 24,265 | 40,591
2020 | 2,307 | 2,359
2021 | 207,294 | 200,743
2022 | 21,080 | —
| 813,799 | 801,160

| 2022 REPORT & ACCOUNTS

300 |
The impact of income taxes in Net income and in other balances of Group's equity, as at 31 December 2022, is analysed
as follows:

|  | (Thousands of euros)
| 2022
| Net income for the year | Reserves | Exchange differences
Deferred taxes not depending on the future profits |  |  |
Impairment losses | (712) | — | —
| (712) | — | —
Deferred taxes depending on the future profits |  |  |
Impairment losses | (160,953) | — | (2,542)
Tax losses carried forward (a) | 2,785 | (2,236) | 669
Employee benefits | (6,199) | (126,957) | (449)
Financial assets at fair value through other comprehensive income | — | 575,491 | (1,271)
Derivatives | — | — | (559)
Intangible assets | (463) | — | (33)
Other tangible assets | 503 | — | 12
Others | (29,649) | 6,803 | 1,755
| (193,976) | 453,101 | (2,418)
| (194,688) | 453,101 | (2,418)
Current taxes |  |  |
Current year | (110,551) | (18) | —
Correction of previous years | 919 | — | —
| (109,632) | (18) | —
| (304,320) | 453,083 | (2,418)

The impact of income taxes in Net income and in other balances of Group's equity, as at 31 December 2021, is analysed
as follows:

|  |  | (Thousands of euros)
| 2021
| Net income for the year | Reserves | Exchange differences | Discontinued operations (b)
Deferred taxes not depending on the future profits |  |  |  |
Employee benefits | (1,288) | (2) | — | —
| (1,288) | (2) | — | —
Deferred taxes depending on the future profits |  |  |  |
Impairment losses | (121,002) | — | (937) | —
Tax losses carried forward (a) | 15,567 | 3,353 | 3,607 | (11,937)
Employee benefits | 4,774 | (10,218) | (283) | (643)
Financial assets at fair value through other comprehensive income | — | 184,667 | (12,286) | 20
Derivatives | — | — | (472) | —
Intangible assets | (382) | — | 1,972 | —
Other tangible assets | (174) | — | (1,939) | —
Others | (19,768) | 332 | 11,802 | (27)
| (120,985) | 178,134 | 1,464 | (12,587)
| (122,273) | 178,132 | 1,464 | (12,587)
Current taxes |  |  |  |
Current year | (81,689) | 6 | — | (3,233)
Correction of previous years | 336 | — | — | —
| (81,353) | 6 | — | (3,233)
| (203,626) | 178,138 | 1,464 | (15,820)

(a) The amount recorded in reserves refers to the deferred tax on the part of tax loss arising from the deduction of negative equity
changes recorded in reserves that contribute to the calculation of taxable income.
(b) Relates to Banque Privée BCP (Suisse), S.A. and Seguradora Internacional de Moçambique, S.A. (now designated Fidelidade
Moçambique - Companhia de Seguros S.A.)

2022 REPORT & ACCOUNTS |

| 301
The reconciliation between the nominal tax rate and the effective tax rate is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Net income / (loss) before income taxes | 428,458 | 157,737
Current tax rate (%) | 31.5% | 31.5%
Expected tax | (134,964) | (49,687)
Non-deductible impairment and provisions (a) | (145,811) | (100,417)
Mandatory contributions to the banking sector (b) | (25,502) | (30,400)
Results of companies accounted by the equity method | 21,657 | 17,935
Interests on other equity instruments (c) | 11,655 | 11,655
Effect of the tax rate difference (d) | (8,508) | (20,002)
Effect of recognition/derecognition net of deferred taxes (e) | (24,252) | (23,400)
Non-deductible costs and other corrections | 2,013 | (2,875)
Correction of previous years | 660 | (5,410)
Autonomous tax | (1,268) | (1,025)
Total | (304,320) | (203,626)
Effective rate (%) | 71.0% | 129.1%

(a) In 2022 includes the negative amount of Euros 85,896,000 (2021: negative Euros 85,956,000) related to the impact of the non-
deductibility for tax purposes of the provisions related to legal risks associated with the mortgage loans portfolio granted in foreign
currency by Bank Millennium, such as the negative amount of Euros 32,227,000 regarding the goodwill impairment associated to this
subsidiary.
(b) Refers to mandatory contributions to the banking sector in Portugal and in Poland.
(c) Relates to the impact of the deduction for taxable income purposes of interest paid in respect of perpetual bonds representing
subordinated debt issued in 2019.
(d) In 2022 this balance includes the negative amount of Euros 19,507,000 (2021: negative of Euros 27,425,000) related with the tax
rate difference applicable to the net loss reported by the Polish subsidiary and also includes Euros 21,668,000 (2021: Euros 16,015,000)
related with the effect of the taxation of 20% tax on interests of Mozambique's public debt securities.
(e) In 2022 includes the negative amount of Euros 12,916,000 relating to unrecognized deferred taxes on tax losses for the year of BIM
– Banco Internacional de Moçambique. In 2021, it includes the negative amount of Euros 2,071,000 related to unrecognized income
taxes losses for the year of BIM and the negative amount of Euros 18,784,000 related to the non-recognition of deferred taxes on
temporary differences.

| 2022 REPORT & ACCOUNTS

302 |
32.Other assets
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Deposit account applications | 51,371 | 396,638
Capital supplies | 178,725 | 244,991
Obligations with post-employment benefits (note 50) | 593,494 | 202,366
Debtors for futures and options transactions | 191,290 | 138,688
Debtors |  |
Residents |  |
Receivables from real estate, transfers of assets and other securities | 111,693 | 109,509
Prosecution cases / agreements with the Bank | 12,163 | 13,037
SIBS | 3,521 | 3,490
Others | 66,744 | 23,569
Non-residents | 30,584 | 51,909
Amounts due for collection | 80,024 | 81,082
Interest and other amounts receivable | 69,613 | 69,354
Amounts receivable on trading activity | 3,234 | 32,303
Amounts due from customers | 51,229 | 29,020
Artistic patrimony | 28,796 | 28,818
Prepaid expenses | 23,654 | 23,157
Subsidies receivables | 10,764 | 15,656
Other recoverable tax | 9,082 | 11,696
Gold and other precious metals | 3,640 | 3,851
Capital supplementary contributions | 165 | 165
Associated companies | 145 | 162
Sundry assets | 254,276 | 166,030
| 1,774,207 | 1,645,491
Impairment for other assets | (191,752) | (260,199)
| 1,582,455 | 1,385,292

As referred in note 47, as at 31 December 2022, the item Capital supplies includes the amount of Euros 171,397,000 (31
December 2021: Euros 237,671,000) arising from the transfers of assets to Specialized recovery funds which have
impairment in the same amount.
As at 31 December 2021, the balance Deposit account applications included the amount of Euros 348,559,000 on the
Clearing houses / Clearing derivatives. During 2022, this type of operations was recorded directly in the book value of
trading and hedging derivatives, as a result of the change made in the clearing process from CTM (Collateralised-to-
Market) to STM (Settled-to-Market).
The balance Amounts receivable on trading activity includes amounts receivable within 3 business days of stock
exchange operations.
Considering the nature of these transactions and the age of the amounts of these items, the Group's procedure is to
periodically assess the collectability of these amounts and whenever impairment is identified, an impairment loss is
registered in the income statement.

2022 REPORT & ACCOUNTS |

| 303
The changes occurred in Impairment of other assets are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Balance on 1 January | 260,199 | 265,342
Transfers resulting from changes in the Group's structure (SIM - Seguradora Internacional de Moçambique) | (1,038) | (375)
Other transfers | 908 | 536
Charge for the year (note 12) | 17,699 | 16,618
Reversals for the year (note 12) | (7,047) | (9,263)
Amounts charged-off | (78,835) | (12,717)
Exchange rate differences | (134) | 58
Balance at the end of the year | 191,752 | 260,199

33.Resources from credit institutions
This balance is analysed as follows:

|  |  |  |  | (Thousands of euros)
| 2022 | 2021
| Non-interest bearing | Interest bearing | Total | Non-interest bearing | Interest bearing | Total
Resources and other financing |  |  |  |  |  |
from Central Banks |  |  |  |  |  |
Bank of Portugal | — | 592,740 | 592,740 | — | 8,028,747 | 8,028,747
Central Banks abroad | — | 14,736 | 14,736 | — | 82,155 | 82,155
| — | 607,476 | 607,476 | — | 8,110,902 | 8,110,902
Resources from credit institutions in Portugal |  |  |  |  |  |
Sight deposits | 92,493 | — | 92,493 | 96,654 | — | 96,654
Term Deposits | — | 151,244 | 151,244 | — | 64,217 | 64,217
CIRS and IRS operations collateralised by deposits (*) | — | — | — | — | 1,620 | 1,620
Other resources | — | — | — | — | 1 | 1
| 92,493 | 151,244 | 243,737 | 96,654 | 65,838 | 162,492
Resources from credit institutions abroad |  |  |  |  |  |
Repayable on demand | 74,890 | — | 74,890 | 108,247 | — | 108,247
Term deposits | — | 152,385 | 152,385 | — | 89,053 | 89,053
Loans obtained | — | 293,387 | 293,387 | — | 399,678 | 399,678
CIRS and IRS operations collateralised by deposits (*) | 92,299 | — | 92,299 | 19,998 | — | 19,998
Other resources | — | 4,186 | 4,186 | — | 5,704 | 5,704
| 167,189 | 449,958 | 617,147 | 128,245 | 494,435 | 622,680
| 259,682 | 1,208,678 | 1,468,360 | 224,899 | 8,671,175 | 8,896,074

(*)Under the scope of transactions involving derivative financial instruments (IRS and CIRS) with institutional counterparties, and in
accordance with the terms of their respective agreements ("Cash collateral"). These deposits are held by the Group and are
reported as collateral for the referred operations (IRS and CIRS), whose revaluation is positive.

| 2022 REPORT & ACCOUNTS

304 |
As at 31 December 2022, the item Resources and others financing from Central Banks – of Portugal includes a total
amount associated with the TLTRO III program of Euros 600,000,000 (31 December 2021: Euros 8,150,070,000).
As at 21 December 2022, the Bank repaid in advance an amount of Euros 7,550,070,000 of this line.
Considering the financing characteristics and the nature of the respective lender, the Bank accounts for the TLTRO III
operation under IFRS9. The Bank considers that the operation constitutes a variable rate financing, indexed to the
Deposit Facility Rate of the European Central Bank (ECB), having fulfilled the necessary criteria for it. Specifically for
the period between 24 June 2020 and 23 June 2022, the Bank complied with the conditions required for the
application, to each of the two tranches of the financing, of a maximum interest rate of -1%. Consequently, it
recognises in the financial statements, for the referred interest counting period, the rate of -1%. For the period
between June 24 and December 31, 2022, the rate resulting from the provisions of the regulation applies for the
calculation in the different subperiods.
This balance is analysed, by remaining period, as follows:

| (Thousands of euros)
| 2022 | 2021
Up to 3 months | 499,654 | 316,096
3 to 6 months | 53,095 | 21,173
6 to 12 months | 34,278 | 54,863
1 to 5 periods | 881,333 | 8,503,029
Over 5 years | — | 913
| 1,468,360 | 8,896,074

34.Resources from customers and other loans
This balance is analysed as follows:

|  |  |  |  | (Thousands of euros)
| 2022 | 2021
| Non-interest bearing | Interest bearing | Total | Non-interest bearing | Interest bearing | Total
Deposits from customers |  |  |  |  |  |
Repayable on demand | 48,490,922 | 182,647 | 48,673,569 | 48,771,241 | 176,561 | 48,947,802
Term deposits | — | 19,816,079 | 19,816,079 | — | 14,241,514 | 14,241,514
Saving accounts | — | 6,315,759 | 6,315,759 | — | 5,912,193 | 5,912,193
Treasury bills and other assets sold under repurchase agreement | — | — | — | — | 28,718 | 28,718
Cheques and orders to pay | 564,369 | — | 564,369 | 369,802 | — | 369,802
Other | — | 60,367 | 60,367 | — | 60,198 | 60,198
| 49,055,291 | 26,374,852 | 75,430,143 | 49,141,043 | 20,419,184 | 69,560,227

In the terms of the Law, the Deposit Guarantee Fund was established to guarantee the reimbursement of funds
deposited in Credit Institutions. The criteria to calculate the annual contributions to the Portuguese fund are defined in
the Regulation no. 11/94 of the Bank of Portugal.

2022 REPORT & ACCOUNTS |

| 305
This balance is analysed, by remaining period until the next operation renewal date, as follows:

| (Thousands of euros)
| 2022 | 2021
Deposits repayable on demand | 48,673,569 | 48,947,802
Term deposits and saving accounts |  |
Up to 3 months | 14,069,453 | 10,785,617
3 to 6 months | 7,034,909 | 5,999,221
6 to 12 months | 3,921,351 | 2,784,000
1 to 5 years | 1,106,125 | 584,717
Over 5 years | — | 152
| 26,131,838 | 20,153,707
Treasury bills and other assets sold under repurchase agreement |  |
Up to 3 months | — | 28,718
| — | 28,718
Cheques and orders to pay |  |
Up to 3 months | 564,369 | 369,802
| 564,369 | 369,802
Other |  |
Up to 3 months | 367 | 198
Over 5 years | 60,000 | 60,000
| 60,367 | 60,198
| 75,430,143 | 69,560,227

35.Non subordinated debt securities issued
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Bonds | 53,799 | 10,606
Covered bonds | — | 999,468
Medium term notes (MTN) | 1,347,967 | 1,020,063
Securitisations | 142,062 | 161,267
| 1,543,828 | 2,191,404
Interests to pay | (66,860) | (979)
Corrections to the value of liabilities subject to hedging operations | (12,523) | (13,564)
Deferred cost expenses | 17,641 | 11,502
| 1,482,086 | 2,188,363

As described in note 48, in 2022 Banco Comercial Português, S.A. issued senior preferred debt securities eligible for
MREL (Minimum Requirement for own funds and Eligible Liabilities), under its Euro Note Programme. The issue, in the
amount of Euros 350 million, will have a tenor of 3 years, with the option of early redemption by the Bank at the end of
year 2, an issue price of 100% and an annual interest rate of 8.5% during the first 2 years (corresponding to a spread of
5.547% over the 2-year mid-swap rate). The annual interest rate for the 3rd year was set at 3-month Euribor plus a
5.547% spread.

| 2022 REPORT & ACCOUNTS

306 |
The characteristics of the bonds issued by the Group, as at 31 December 2022 are analysed as follows:

|  |  |  | (Thousands of euros)
Issue | Issue date | Maturity date | Interest rate | Nominal value | Book value
Banco Comercial Português: |  |  |  |  |
BCP Cln Brisa Fev 2023 Epvm Sr 23 | February, 2015 | February, 2023 | Fixed rate 2.65% - underlying asset Brisa 022023 | 2,000 | 2,008
Bcp 6NC5 Senior Preferred EUR 500MN NG - MTN 856 | February, 2021 | February, 2027 | Fixed rate 1.125%year until Feb-26 /after Euribor 3M + Variable rate 1.55% | 500,000 | 499,283
Bcp 1.75% Eur 500M 6.5Nc5.5 Social Senior Preferred Notes - Mtn 857 | October, 2021 | April, 2028 | Fixed rate 1.75% per year until Apr-27/after + Euribor 3M+ 2% | 500,000 | 443,148
BCP2022 MTN 859 BCP Senior Preferred Notes OCT 2025 | October, 2022 | October, 2025 | Fixed rate 8.5% until October 2024; after 5.547% + Euribor 3M | 350,000 | 353,112
BCP Finance Bank: |  |  |  |  |
BCP Fin.Bank - EUR 10 M | March, 2004 | March, 2024 | Fixed rate 5.01% | 300 | 311
Magellan Mortgages n.º 3: |  |  |  |  |
Mbs Magellan Mortgages S 3 Cl.A | June, 2005 | May, 2058 | Euribor 3M + 0.26% | 140,215 | 130,439
Mbs Magellan Mortgages S.3 Cl.B | June, 2005 | May, 2058 | Euribor 3M + 0.38% | 724 | 673
Mbs Magellan Mortgages S. 3 Cl.C | June, 2005 | May, 2058 | Euribor 3M + 0.58% | 1,124 | 1,046
Bank Millennium: |  |  |  |  |
Bank Millennium - BMCN_012040 | December, 2022 | January, 2040 | Wibor 3m 7.05% + 1.39% = 20.95% | 51,799 | 52,066
|  |  |  |  | 1,482,086

This balance as at 31 December 2022 is analysed by the remaining period, as follows:

|  |  |  |  | (Thousands of euros)
| 2022
| Up to 3 months | 3 months to 6 months | 6 months to 1 year | 1 year to 5 years | Over 5 years | Total
Bonds | 2,008 | — | — | — | 52,066 | 54,074
Medium term notes (MTNs) | — | — | — | 852,706 | 443,148 | 1,295,854
Securitisations | — | — | — | — | 132,158 | 132,158
| 2,008 | — | — | 852,706 | 627,372 | 1,482,086

This balance as at 31 December 2021 is analysed by the remaining period, as follows:

|  |  |  |  | (Thousands of euros)
| 2021
| Up to 3 months | 3 months to 6 months | 6 months to 1 year | 1 year to 5 years | Over 5 years | Total
Bonds | — | 8,632 | — | 2,008 | — | 10,640
Covered bonds | — | 1,003,750 | — | — | — | 1,003,750
Medium term notes (MTNs) | 3,000 | 9,590 | 9,964 | 311 | 1,001,471 | 1,024,336
Securitisations | — | — | — | — | 149,637 | 149,637
| 3,000 | 1,021,972 | 9,964 | 2,319 | 1,151,108 | 2,188,363

2022 REPORT & ACCOUNTS |

| 307
36.Subordinated debt
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Bonds |  |
Non-Perpetual | 1,376,856 | 1,383,821
Interests to pay | (72,040) | (4,530)
Corrections to the value of liabilities subject to hedging operations | (2,436) | (2,709)
Deferred cost expenses | 30,676 | 18,198
| 1,333,056 | 1,394,780

As at 31 December 2022, the subordinated debt issues are analysed as follows:

|  |  |  | (Thousands of euros)
| 2022
Issue | Issue date | Maturity date | Interest rate | Nominal value | Book value | Own funds value (*)
Banco Comercial Português |  |  |  |  |  |
Bcp Fix Rate Reset Sub Notes-Emtn 854 | December, 2017 | December, 2027 | See reference (i) | 166,300 | 164,044 | 164,175
Bcp Subord Fix Rate Note Projeto Tagus Mtn 855 | September, 2019 | March, 2030 | See reference (ii) | 450,000 | 428,740 | 450,000
BCP Tier 2 Subord Callable Notes Due May 2032 - MTN 858 | November, 2021 | May, 2032 | See reference (iii) | 300,000 | 274,350 | 300,000
BCP2022 Tier 2 Sub Callable Notes Due 2 June 2033 MTN 860 | December, 2022 | March, 2033 | See reference (iv) | 133,700 | 130,932 | 133,700
Bank Millennium Group |  |  |  |  |  |
Bank Millennium - BKMO_071227R | December, 2017 | December, 2027 | 9.7% | 149,521 | 150,475 | 98,956
Bank Millennium - BKMO_300129W | January, 2019 | January, 2029 | 9.6% | 177,290 | 184,471 | 117,334
Magellan No. 3 |  |  |  |  |  |
Magellan No. 3 Series 3 Class F | June, 2005 | May, 2058 | - | 44 | 44 | —
|  |  |  |  | 1,333,056 | 1,264,165

(*) Amount of subordinated loans, eligible as Level 2 own funds, in accordance with Articles 62 a), 63 to 65, 66 a) and 67 of the CRR.
References - Interest rate:
(i) up to the 5th year fixed rate 4.5%; 6th year and following: mid-swap rate in force at the beginning of this period + 4.267%;
(ii) Annual interest rate of 3.871% during the first 5.5 years (corresponding to a spread of 4.231% over the 5.5-year mid-swap rate, for
the remaining 5 years will be applied over the mid-swap rate in force at the beginning of that period).
(iii) Interest rate of 4%, per annum, during the first 5 years and 6 months (corresponding to a spread of 4.065% over the average of the
mid-swap rates of 5 and 6 years). At the end of the first 5 years and 6 months the interest rate will be reset to maturity based on the
5-year mid swaps rate prevailing at that time plus the Spread.
(iv) Fixed annual interest rate of 8.75% during the first 5.25 years. The annual interest rate from year 5.25 onwards was set at the 5-
year mid-swap rate plus a 6.051%.
As described in note 48, BCP issued on 5 December 2022 New Notes in the amount of Euros 133,700,000, which will
have a tenor of 10.25 years, with the option of early redemption by the Bank during a period of three months at the
end of year 5, and fixed annual interest rate of 8.75% during the first 5.25 years. The annual interest rate from year
5.25 onwards was set at the 5-year mid-swap rate plus a 6.051%.

| 2022 REPORT & ACCOUNTS

308 |
As at 31 December 2021, the subordinated debt issues are analysed as follows:

|  |  |  |  | (Thousands of euros)
| 2021
Issue | Issue date | Maturity date | Interest rate | Nominal value | Book value | Own funds value (*)
Banco Comercial Português |  |  |  |  |  |
Bcp Fix Rate Reset Sub Notes-Emtn 854 | December, 2017 | December, 2027 | See reference (i) | 300,000 | 300,452 | 300,000
Bcp Subord Fix Rate Note Projeto Tagus Mtn 855 | September, 2019 | March, 2030 | See reference (ii) | 450,000 | 458,461 | 450,000
BCP Tier 2 Subord Callable Notes Due May 2032 - MTN 858 | November, 2021 | May, 2032 | See reference (iii) | 300,000 | 299,615 | 300,000
Grupo Bank Millennium |  |  |  |  |  |
Bank Millennium - BKMO_071227R | December, 2017 | December, 2027 | 9.21% | 152,708 | 153,191 | 60,310
Bank Millennium - BKMO_300129W | January, 2019 | January, 2029 | 5.7% | 181,069 | 183,017 | 71,510
Magellan No. 3 |  |  |  |  |  |
Magellan No. 3 Series 3 Class F | June, 2005 | May, 2058 | - | 44 | 44 | —
|  |  |  |  | 1,394,780 | 1,181,820

(*) Amount of subordinated loans, eligible as Level 2 own funds, in accordance with Articles 62 a), 63 to 65, 66 a) and 67 of the CRR.
References - Interest rate:
(i) up to the 5th year fixed rate 4.5%; 6th year and following: mid-swap rate in force at the beginning of this period + 4.267%;
(ii) Annual interest rate of 3.871% during the first 5.5 years (corresponding to a spread of 4.231% over the 5.5-year mid-swap rate, for
the remaining 5 years will be applied over the mid-swap rate in force at the beginning of that period).
(iii) Interest rate of 4%, per annum, during the first 5 years and 6 months (corresponding to a spread of 4.065% over the average of the
mid-swap rates of 5 and 6 years). At the end of the first 5 years and 6 months the interest rate will be reset to maturity based on the
5-year mid swaps rate prevailing at that time plus the Spread.
The analysis of the subordinated debt by remaining period, is as follows:

| (Thousands of euros)
| 2022 | 2021
1 to 5 years | 314,519 | —
Over 5 years | 1,018,537 | 1,394,780
| 1,333,056 | 1,394,780

37.Financial liabilities held for trading
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Short selling securities | 1,022 | 3,625
Trading derivatives (note 23) |  |
Swaps | 170,157 | 217,587
Options | 7,414 | 1,478
Embedded derivatives | 53,495 | 6,365
Forwards | 9,418 | 2,186
| 240,484 | 227,616
| 241,506 | 231,241
Level 2 | 186,130 | 221,040
Level 3 | 55,376 | 10,201

As referred in IFRS 13, financial instruments are measured according to the levels of valuation described in note 49. The
balance Financial liabilities held for trading includes, as at 31 December 2022, the embedded derivatives valuation
separated from the host contracts in accordance with the accounting policy presented in note 1 C5. in the amount of
Euros 53,495,000 (31 December 2021: Euros 6,365,000). This note should be analysed together with note 24.

2022 REPORT & ACCOUNTS |

| 309
38.Financial liabilities designated at fair value through profit or loss
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Deposits from customers (*) | 476,671 | —
Certificates | 850,681 | 961,730
Debt securities at fair value through profit and loss |  |
Medium term notes (MTN) | 490,326 | 620,048
| 1,817,678 | 1,581,778

(*) Deposits from customers whose remuneration is indexed to a set of shares and/or indices.
As at 31 December 2022, the analysis of Debt securities at fair value through profit and loss, is as follows:

|  |  | (Thousands of euros)
Issue | Issue date | Maturity date | Interest rate | Nominal value | Book value
Banco Comercial Português: |  |  |  |  |
Millennium Cabaz 3 Ações-Smtn Sr13 | June, 2018 | June, 2023 | Indexed to portfolio of 3 shares | 82,739 | 80,858
Bcp Tit Div Millenn Cabaz 3Acoes-Smtn Sr20 | September, 2018 | September, 2023 | Indexed to portfolio of 3 shares | 28,322 | 27,420
Bcp Tit Divida MillennCabaz 3 Ações-Smtn 25 | December, 2018 | December, 2023 | Indexed to portfolio of 3 shares | 92,429 | 89,479
Bcp Cabaz 3 Ações Fevereiro 2024 - Smtn Sr 31 | February, 2019 | February, 2024 | Indexed to portfolio of 3 shares | 72,756 | 69,684
Bcp Tit Div Mill Cabaz 3 Ações 8Abr24 Smtn Sr 35 | April, 2019 | April, 2024 | Indexed to portfolio of 3 shares | 65,329 | 62,066
Bcp Tit Div Millennium Cabaz 5 Ac 26Julho2024 Smtn 42 | July, 2019 | July, 2024 | Indexed to portfolio of 5 shares | 75,958 | 72,405
Bcp Tit Divida Millennium Cabaz 5 Acoes 6Dez24 Smtn 44 | December, 2019 | December, 2024 | Indexed to portfolio of 5 shares | 95,388 | 88,414
|  |  |  |  | 490,326

As at 31 December 2022, the analysis of Debt securities at fair value through profit and loss, is as follows:

|  |  |  |  | (Thousands of euros)
| 2022
| Up to 3 months | 3 months to 6 months | 6 months to 1 year | 1 year to 5 years | Over 5 years | Total
Deposits from customers | — | — | 315,692 | 160,979 | — | 476,671
Certificates | — | — | — | — | 850,681 | 850,681
Debt securities at fair value through profit and loss |  |  |  |  |  |
MTN | — | 80,858 | 116,899 | 292,569 | — | 490,326
| — | 80,858 | 432,591 | 453,548 | 850,681 | 1,817,678

As at 31 December 2021, the analysis of this balance, by remaining period, is as follows:

|  |  |  |  | (Thousands of euros)
| 2021
| Up to 3 months | 3 months to 6 months | 6 months to 1 year | 1 year to 5 years | Over 5 years | Total
Certificates | — | — | — | — | 961,730 | 961,730
Debt securities at fair value through profit and loss |  |  |  |  |  |
MTN | 13,781 |  |  | 606,267 | — | 620,048
| 13,781 | — | — | 606,267 | 961,730 | 1,581,778

| 2022 REPORT & ACCOUNTS

310 |
39.Provisions
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Provision for guarantees and other commitments | 110,754 | 110,649
Other provisions for liabilities and charges | 451,032 | 348,095
| 561,786 | 458,744

Changes in Provisions for guarantees and other commitments are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Balance on 1 January | 110,649 | 103,830
Transfers | (708) | (1,651)
Charge for the year (note 13) | 27,864 | 44,414
Reversals for the year (note 13) | (26,939) | (36,278)
Exchange rate differences | (112) | 334
Balance at the end of the year | 110,754 | 110,649

Changes in Other provisions for liabilities and charges are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Balance on 1 January | 348,095 | 207,691
Transfers resulting from changes in the Group's structure | — | (30)
Transfers to Impairment of investments in associates (Banco Millennium Atlântico, S.A.) (note 26) | — | (22,300)
Other transfers | (5,504) | 4,596
Charge of the year for restructuring costs (note 7) | 4,414 | 84,152
Charge for the year (note 13) | 569,226 | 651,156
Reversals for the year (note 13) | (1,854) | (16,566)
Amounts charged-off | (116,874) | (135,506)
Allocation to loan's portfolio (note 22) | (344,052) | (443,296)
Exchange rate differences | (2,419) | 18,198
Balance at the end of the year | 451,032 | 348,095

The Other provisions for liabilities and charges were based on the probability of occurrence of certain contingencies
related to risks inherent to the Group's activity, being reviewed at each reporting date in order to reflect the best
estimate of the amount and respective probability of payment.
This balance includes provisions for lawsuits, frauds and tax contingencies. As at 31 December 2022, the provisions
constituted to cover tax contingencies totalled Euros 38,311,000 (31 December 2021: Euros 37,524,000) and are
associated, essentially, to contingencies related to VAT and Stamp Duty.
Additionally, there are provisions for liabilities and charges recorded for corporate restructuring funds and carved-out
assets of the Project Crow, completed in December 2022.

2022 REPORT & ACCOUNTS |

| 311
In 2021, the Bank's Board of Directors approved in April the employee reduction plan. The decision was taken based on
a thorough analysis of needs and existing capacity, considering the specifics of the Bank, the changes in behaviour and
needs of customers, the impact of new technologies on business models and processes, as well as the developments
that are expected for the Bank.
The implementation of this plan started in mid-June 2021, having been contacted throughout the 3rd quarter of 2021
all employees covered by the program, which included early retirements and terminations. For diverse reasons, the
effective departure of some Employees was agreed for dates during the first half of 2022.
In view of the initiatives that had already been developed on 30 June 2021, the Bank considered that the requirements
defined in IAS 37 - Provisions, Contingent Liabilities and Contingent Assets for the recognition of restructuring costs in
its accounts for the first half of 2021 were met. Thus, in the first half of 2021, was recorded in personnel costs, a
provision for restructuring costs in the amount of Euros 81,373,000, which was reinforced in December in the amount of
Euros 2,779,000, which makes a total of Euros 84,152,000 in 2021 (note 7). As at 31 December 2021, the balance of the
provision for restructuring costs amounted to Euros 4,692,000, of which Euros 2,297,000 are referred to agreements
already concluded with some employees whose effective departures have been occur during the first half of 2022 and
Euros 2,395,000 are referred to future costs with the health protection of former Employees, who left the Bank as part
of the employees' reduction process developed in 2021.
As at December 2022, the balance of this provision amounts to Euros 4,893,000, which was reinforced in the amount of
Euros 4,414,000 (note 7), referring to agreements already concluded with some employees whose effective departures
will occur during the first half of 2023. In 2022, the Bank also has written-off the amount of Euros 4,213,000, of which
Euros 3,443,000 corresponds to costs with the employee's departures and Euros 770,000 refers to costs with health
protection of former Employees.
Provisions for legal risk related to foreign currency-indexed mortgage loans in Bank Millennium (Poland)
In 2021, Bank Millennium changed the accounting policy regarding the recognition of provisions for future claims related
to active CHF mortgage loans in the balance sheet. As a result of changes in market conditions, such as the growing
number of unfavourable court judgments declaring the entire agreement or certain provisions of these credits to be
invalid, the Bank does not expect that all contractual cash flows related to these loans will be recovered. As a result,
Bank Millennium allocates provisions for future claims and recognizes them as a reduction of the gross carrying amount
of loans for which a decrease in future cash flows is expected, in accordance with paragraph B5.4.6 of IFRS 9 "Financial
Instruments" (previously provisions for future claims used to be recognized in accordance with IAS 37 "Provisions,
Contingent Liabilities and Contingent Assets"). As a result of the above change, the approach applied in accordance
with IAS 37 will be continued only regarding claims relating to already repaid (or almost fully repaid) receivables not
recognised in Bank Millennium's balance sheet.
As at 31 December 2022, the Loans and advances to customers portfolio in CHF has a gross amount of Euros
2.477.851,000 (31 December 2021: Euros 2,817,504,000).
As at 31 December 2022, the provisions estimated by Bank Millennium to address the legal risk related to foreign
currency-indexed mortgage loans amount to Euros 1,152,457,000 (PLN 5,395,344,000)), of which Euros 976,782,000
(PLN 4,572,901,000) are presented under assets, as a deduction from the gross amount of the loan portfolio in CHF
(note 22) and Euros 175,676,000 (PLN 822,443,000) are presented under Provisions.
With reference to 31 December 2021, the provisions estimated by Bank Millennium to address the legal risk related to
foreign currency-indexed mortgage loans amounted to Euros 727,026,000 (PLN 3,332,614,000), of which Euros
636,309,000 (PLN 2,916,778,000) were presented under assets, as a deduction from the gross amount of the loan
portfolio in CHF (note 21) and Euros 90,716,000 (PLN 415,835,000) were presented under Provisions.
The variation in the level of provisions or concrete losses will depend on the final court decisions about each case and
on the number of court cases.

| 2022 REPORT & ACCOUNTS

312 |
40.Other liabilities
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Interests and other amounts payable | 163,843 | 148,522
Operations to be settled - foreign, transfers and deposits | 212,208 | 134,996
Credit insurance received and to accrued | 62,740 | 72,075
Holidays, subsidies and other remuneration payable | 55,132 | 51,841
Transactions on securities to be settled | 4,514 | 39,979
Public sector | 43,628 | 35,460
Creditors |  |
Rents to pay | 185,163 | 211,345
Deposit account and other applications | 89,386 | 58,390
Suppliers | 35,649 | 39,350
From factoring operations | 41,618 | 32,113
For futures and options transactions | 73,394 | 14,356
Liabilities not covered by the Group Pension Fund - amounts payable by the Group | 10,819 | 6,389
Associated companies | 21 | 106
Other creditors |  |
Residents | 66,158 | 27,107
Non-residents | 70,590 | 60,394
Deferred income | 10,155 | 9,543
Other administrative costs payable | 4,763 | 4,133
Other liabilities | 262,192 | 170,884
| 1,391,973 | 1,116,983

The balance Liabilities not covered by the Group Pension Fund - amounts payable by the Group includes the amount of
Euros 6,777,000 (31 December 2021: Euros 4,143,000) related to the actual value of benefits attributed associated with
mortgage loans to employees, retirees and former employees.
The balance Amounts payable on trading activity includes amounts payable within 3 business days of stock exchange
operations.
The Group has several operating leases for properties, being registered in the item Rents to pay the amount of lease
liabilities recognised under IFRS 16, as described in the accounting policy 1 H. The analysis of this balance, by maturity,
is as follows:

| (Thousands of euros)
| 2022 | 2021
Until 1 year | 20,402 | 22,250
1 to 5 years | 137,949 | 82,181
Over 5 years | 33,485 | 114,296
| 191,836 | 218,727
Accrued costs recognised in Net interest income | (6,673) | (7,382)
| 185,163 | 211,345

2022 REPORT & ACCOUNTS |

| 313
41.Share capital, Share premium and Other equity instruments
As at 31 December 2022, the Bank's share capital amounts to Euros 3,000,000,000 (31 December 2021: Euros
4,725,000,000) and is represented by 15,113,989,952 nominative book-entry shares without nominal value, fully
subscribed and paid up. As described in note 48, pursuant to the resolutions adopted at the General Meeting held on 20
December 2022, the Bank registered its new share capital of 3,000,000,000 Euros, maintaining the number of
nominatives, book-entry shares without nominal value and of the voting rights.
As at 31 December 2022, the Share premium amounts to Euros 16,470,667.11, corresponding to the difference between
the issue price (Euros 0.0834 per share) and the issue value (Euros 0.08 per share) determined under the scope of the
Exchange Offer occurred in June 2015.
As at 31 December 2022, the Other equity instruments in the amount of Euros 400,000,000 corresponds to 2,000
subordinated perpetual bonds (Additional Tier 1), issued on 31 January 2019, with a nominal value of Euros 200,000
each. This issue was classified as an equity instrument in accordance with the specific rules of IAS 32 and accounting
policy 1E. This operation without fixed term has the option of early repayment by the Bank as from the end of the 5th
year, and an annual interest rate of 9.25% during the first 5 years. As an instrument classified as AT1, the corresponding
interest payment is decided by the Bank at its discretion and is still subject to compliance with a set of conditions,
including compliance with the combined requirement of capital reserve and the existence of Distributable Funds in
sufficient amount. The payment of interest may also be cancelled by imposition of the competent authorities.
As at 31 December 2022, the shareholders who hold, individually or jointly, 5% or more of the Bank's capital, are the
following:

Shareholder | number of shares | % share capital | % voting rights
Fosun Group - Chiado (Luxembourg) S.a.r.l. held by Fosun International Holdings Ltd | 4,525,940,191 | 29.95% | 29.95%
Sonangol - Sociedade Nacional de Combustíveis de Angola, EP, directly | 2,946,353,914 | 19.49% | 19.49%
Total Qualified Shareholdings | 7,472,294,105 | 49.44% | 49.44%

Under the scope of the Portuguese Securities Code update, which came into force at the beginning of 2022, the
reference threshold for qualifying holdings was changed from 2% to 5%.
As at 31 December 2021, the shareholders who hold, individually or jointly, 2% or more of the Bank's capital , are the
following:

Shareholder | number of shares | % share capital | % voting rights
Fosun Group - Chiado (Luxembourg) S.a.r.l. held by Fosun International Holdings Ltd | 4,525,940,191 | 29.95% | 29.95%
Sonangol - Sociedade Nacional de Combustíveis de Angola, EP, directly | 2,946,353,914 | 19.49% | 19.49%
BlackRock, Inc. (*) | 404,590,600 | 2.68% | 2.68%
EDP Pension Fund (**) | 311,616,144 | 2.06% | 2.06%
Total Qualified Shareholdings | 8,188,500,849 | 54.18% | 54.18%

(*) In accordance with the announcement on 30 April 2021 (last information available).
(**) Allocation in accordance with Art. 20 (1.f) of the Portuguese Securities Code.

| 2022 REPORT & ACCOUNTS

314 |
42.Legal and statutory reserves
Under the Portuguese legislation, the Bank is required to annually set-up a legal reserve equal to a minimum of 10% of
annual profits until the reserve equals the share capital, or until the sum of the free reserves constituted and the
retained earnings, if higher. In accordance with the proposal for the appropriation of net income for the 2021 financial
year approved at the General Shareholders' Meeting held on 4 May 2022, the Bank increased its legal reserves in the
amount of Euros 9,006,000, thus, as at 31 December 2022 the Legal Reserves amount to Euros 268,534,000 (31
December 2021: Euros 259,528,000).
In accordance with the current Portuguese legislation, the Group companies must set-up annually a reserve with a
minimum percentage between 5 and 20% of their net annual profits depending on the nature of their economic activity
and are recognised in Other reserves and retained earnings in the Bank's consolidated financial statements (note 43).
43.Reserves and retained earnings
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Fair value changes - Gross amount |  |
Financial assets at fair value through other comprehensive income (note 23) |  |
Debt instruments (*) | (228,425) | 8,696
Equity instruments | (25,846) | (30,242)
Of associated companies and other changes | (67,758) | 39,968
Cash-flow hedge | (1,744,727) | (100,394)
From financial liabilities designated at fair value through profit or loss related to changes in own credit risk | 182 | 245
| (2,066,574) | (81,727)
Fair value changes - Tax |  |
Financial assets at fair value through other comprehensive income |  |
Debt instruments | 58,780 | (12,426)
Equity instruments | 1,550 | 6,055
Cash-flow hedge | 540,755 | 26,330
From financial liabilities designated at fair value through profit or loss related to changes in own credit risk | (57) | (77)
| 601,028 | 19,882
| (1,465,546) | (61,845)
Exchange differences arising on consolidation |  |
Bank Millennium, S.A. | (92,629) | (76,542)
BIM - Banco Internacional de Moçambique, S.A. | (139,373) | (162,561)
Banco Millennium Atlântico, S.A. | (143,989) | (155,310)
Others | 2,073 | 2,311
| (373,918) | (392,102)
Application of IAS 29 |  |
Effect on equity of Banco Millennium Atlântico, S.A. | 42,316 | 36,571
Others | (3,965) | (3,965)
| 38,351 | 32,606
Other reserves and retained earnings | 3,047,062 | 1,001,645
| 1,245,949 | 580,304

(*) Includes the effects arising from the application of hedge accounting.

2022 REPORT & ACCOUNTS |

| 315
The fair value changes correspond to the accumulated changes of the Financial assets at fair value through other
comprehensive income and Cash flow hedge, in accordance with the accounting policy presented in note 1 C.
The variation in the fair value of cash flow hedges reflects the economic impact on these hedges of the pronounced
increase in market interest rates, an effect that is more than offset by the economic impact on the fair value of
liabilities that are more sensitive to such an increase and that are accounted for at amortized cost.
During 2022, the changes occurred in Fair value changes - Gross amount, excluding the effect of hedge accounting and
changes in own credit risk associated with financial liabilities at fair value through profit or loss, are analysed as
follows:

|  |  |  |  | (Thousands of euros)
| 2022
| Balance as at 1 January | Fair value changes | Fair value hedge adjustment | Impairment in profit or loss | Disposals | Balance as at 31 December
Financial assets at fair value through other comprehensive income (nota 23) |  |  |  |  |  |
Debt instruments |  |  |  |  |  |
Debt securities - Portuguese public issuers | 41,380 | (293,433) | 146,264 | (2,406) | 18,210 | (89,985)
Others | (32,684) | (183,482) | 85,052 | (2,617) | (4,709) | (138,440)
| 8,696 | (476,915) | 231,316 | (5,023) | 13,501 | (228,425)
Equity instruments | (30,242) | (3,183) | — | — | 7,579 | (25,846)
Associated companies and other changes |  |  |  |  |  |
Millenniumbcp Ageas | 30,328 | (109,649) | — | — | — | (79,321)
Others | 9,640 | 1,923 | — | — | — | 11,563
| 39,968 | (107,726) | — | — | — | (67,758)
| 18,422 | (587,824) | 231,316 | (5,023) | 21,080 | (322,029)

The changes occurred during 2021 in Fair value changes - Gross amount, excluding the effect of hedge accounting and
changes in own credit risk associated with financial liabilities at fair value through profit or loss, are analysed as
follows:

|  |  |  |  | (Thousands of euros)
| 2021
| Balance as at 1 January | Fair value changes | Fair value hedge adjustment | Impairment in profit or loss | Disposals | Balance as at 31 December
Financial assets at fair value through other comprehensive income (nota 23) |  |  |  |  |  |
Debt instruments |  |  |  |  |  |
Debt securities - Portuguese public issuers | 90,611 | (49,191) | 37,417 | 920 | (38,377) | 41,380
Others | 114,981 | (176,982) | 54,546 | 3,706 | (28,935) | (32,684)
| 205,592 | (226,173) | 91,963 | 4,626 | (67,312) | 8,696
Equity instruments | (38,366) | 1,231 | — | — | 6,893 | (30,242)
Associated companies and other changes |  |  |  |  |  |
Millenniumbcp Ageas | 36,560 | (6,232) | — | — | — | 30,328
Others | 6,125 | 3,515 | — | — | — | 9,640
| 42,685 | (2,717) | — | — | — | 39,968
| 209,911 | (227,659) | 91,963 | 4,626 | (60,419) | 18,422

The item Disposals refers to the derecognition of debt securities and equity instruments at fair value through other
comprehensive income.

| 2022 REPORT & ACCOUNTS

316 |
44.Non-controlling interests
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Fair value changes |  |
Debt instruments | (98,139) | (77,625)
Equity instruments | 2,380 | 2,993
Cash-flow hedge | (43,281) | (41,248)
Other | 7 | 4
| (139,033) | (115,876)
Deferred taxes |  |
Debt instruments | 18,531 | 14,704
Equity instruments | (467) | (568)
Cash-flow hedge | 8,223 | 7,837
| 26,287 | 21,973
| (112,746) | (93,903)
Exchange differences arising on consolidation | (187,306) | (181,738)
Actuarial losses (net of taxes) | 1,742 | 435
Other reserves and retained earnings | 1,080,424 | 1,217,878
| 782,114 | 942,672

The balance Non-controlling interests is analysed as follows:

|  |  | (Thousands of euros)
| Balance Sheet | Income Statement
| 2022 | 2021 | 2022 | 2021
Continuing operations |  |  |  |
Bank Millennium Group | 585,618 | 729,040 | (108,125) | (145,672)
BIM - Banco Internacional de Moçambique Group | 174,041 | 186,578 | 35,323 | 31,837
Other subsidiaries | 22,455 | 27,054 | (5,020) | 202
| 782,114 | 942,672 | (77,822) | (113,633)
Discontinued or discontinuing operations |  |  |  |
BIM - Banco Internacional de Moçambique Group (*) | — | — | — | 543
| 782,114 | 942,672 | (77,822) | (113,090)

(*) Corresponds to the non-controlling interests of Seguradora Internacional de Moçambique, S.A. (now designated Fidelidade
Moçambique - Companhia de Seguros S.A), entity considered a discontinued operation in December 2021.

2022 REPORT & ACCOUNTS |

| 317
The following table presents a summary of financial information for the main subsidiaries included in this balance,
prepared in accordance with IFRS. The information is presented before inter-company eliminations:

|  |  | (Thousands of euros)
| Bank Millennium Group | BIM - Banco International de Moçambique Group
| 2022 | 2021 | 2022 | 2021
Net profit for the year | (216,683) | (291,927) | 106,030 | 95,566
Net profit for the year attributable to the shareholders | (108,558) | (146,255) | 70,707 | 63,729
Net profit for the year attributable to non-controlling interests | (108,125) | (145,672) | 35,323 | 31,837
Other comprehensive income attributable to the shareholders | (34,929) | (120,143) | 23,390 | 67,178
Other comprehensive income attributable to non-controlling interests | (34,790) | (119,663) | 11,685 | 34,215
Total comprehensive income | (286,402) | (531,733) | 141,105 | 196,959
Balance sheet |  |  |  |
Financial assets | 23,055,876 | 22,101,264 | 2,606,994 | 2,339,401
Non-financial assets | 641,571 | 568,059 | 217,416 | 187,306
Financial liabilities | (21,684,366) | (20,581,439) | (2,235,210) | (1,900,844)
Non-financial liabilities | (839,464) | (626,847) | (68,008) | (66,959)
Equity | 1,173,617 | 1,461,037 | 521,192 | 558,904
Equity attributed to the shareholders | 587,999 | 731,997 | 347,559 | 372,708
Equity attributed to the non-controlling interests | 585,618 | 729,040 | 173,633 | 186,196
Cash flows arising from: |  |  |  |
operating activities | 2,134,937 | 608,072 | 104,089 | 90,046
investing activities | 260,370 | (121,421) | (12,141) | 57,945
financing activities | (75,834) | (97,068) | (191,515) | (85,563)
Increase / (decrease) in cash and equivalents | 2,319,473 | 389,583 | (99,567) | 62,428
Dividends paid during the year: |  |  |  |
attributed to the shareholders | — | — | 119,244 | 31,744
attributed to the non-controlling interests | — | — | 59,572 | 15,859
| — | — | 178,816 | 47,603

| 2022 REPORT & ACCOUNTS

318 |
45.Guarantees and other commitments
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Guarantees granted |  |
Guarantees | 4,144,220 | 3,957,973
Stand-by letter of credit | 57,084 | 58,536
Open documentary credits | 258,591 | 268,399
Bails and indemnities | 135,718 | 136,145
| 4,595,613 | 4,421,053
Commitments to third parties |  |
Irrevocable commitments |  |
Term deposits contracts | 1,621 | 8,760
Irrevocable credit lines | 4,880,858 | 4,741,586
Securities subscription | 41,285 | 70,017
Other irrevocable commitments | 153,982 | 146,065
Revocable commitments |  |
Revocable credit lines | 5,834,056 | 5,437,681
Bank overdraft facilities | 998,886 | 1,063,309
Other revocable commitments | 128,025 | 133,354
| 12,038,713 | 11,600,772
Guarantees received | 29,552,693 | 29,361,511
Commitments from third parties | 13,453,876 | 13,567,068
Securities and other items held for safekeeping | 75,348,414 | 80,154,791
Securities and other items held under custody by the Securities Depository Authority | 82,314,713 | 92,350,151
Other off balance sheet accounts | 131,084,605 | 129,608,603

The guarantees granted by the Group may be related to loans transactions, where the Group grants a guarantee in
connection with a loan granted to a client by a third entity. According to its specific characteristics it is expected that
some of these guarantees expire without being executed and therefore these transactions do not necessarily represent
a cash-outflow. The estimated liabilities are recorded under provisions (note 39).
Stand-by letters and open documentary credits aim to ensure the payment to third parties from commercial deals with
foreign entities and therefore financing the shipment of the goods. Therefore, the credit risk of these transactions is
limited since they are collateralised by the shipped goods and are generally short-term operations.
Irrevocable commitments are non-used parts of credit facilities granted to corporate or retail customers. Many of these
transactions have a fixed term and a variable interest rate and therefore the credit and interest rate risk are limited.
The financial instruments accounted as Guarantees and other commitments are subject to the same approval and
control procedures applied to the credit portfolio, namely regarding the analysis of objective evidence of impairment,
as described in the accounting policy in note 1.C. The maximum credit exposure is represented by the nominal value
that could be lost related to guarantees and commitments undertaken by the Group in the event of default by the
respective counterparties, without considering potential recoveries or collaterals.

2022 REPORT & ACCOUNTS |

| 319
The balance of Guarantees granted, Irrevocable credit lines and revocable commitments portfolio detailed by stage
according with IFRS 9, is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Stage 1 |  |
Gross amount | 14,303,231 | 13,462,773
Impairment | (11,307) | (12,848)
| 14,291,924 | 13,449,925
Stage 2 |  |
Gross amount | 1,768,595 | 1,922,031
Impairment | (14,893) | (13,032)
| 1,753,702 | 1,908,999
Stage 3 |  |
Gross amount | 365,612 | 412,179
Impairment | (84,554) | (84,769)
| 281,058 | 327,410
| 16,326,684 | 15,686,334

46.Assets under management and custody
In accordance with the no. 4 of the 29th article of Decree-Law 252/2003 of 17 October, which regulates collective
investment organisms, the funds managing companies together with the custodian Bank of the Funds, are jointly
responsible to all the funds investors, for the compliance of all legal obligations arising from the applicable Portuguese
legislation and in accordance with the regulations of the funds. The total value of the funds managed by the Group
companies is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Banco Comercial Português, S.A. (*) | 3,618,326 | 3,866,341
Interfundos - Sociedade Gestora de Organismos de Investimento Coletivo, S.A. | 689,142 | 763,075
Millennium TFI S.A. | 806,162 | 1,143,117
| 5,113,630 | 5,772,533

(*) Corresponds to the assets portfolio that are currently monitored and controlled by the business area as being managed by the Bank.
The Group provides custody, trustee, corporate administration, investment management and advisory services to third
parties, which involve the Group making allocation and purchase and sale decisions in relation to a wide range of
financial instruments. For certain services are set objectives and levels of return for assets under management and
custody. There is no capital or profitability guaranteed by the Bank in these assets. Those assets held in a fiduciary
capacity are not included in the financial statements.
The assets under management and custody are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Assets under deposit | 70,104,626 | 74,410,897
Wealth management | 3,618,326 | 3,866,341
Investment funds | 1,495,304 | 1,906,192
| 75,218,256 | 80,183,430

| 2022 REPORT & ACCOUNTS

320 |
47.Transfers of assets
The Group performed a set of transactions of sale of financial assets (namely loans and advances to customers) for
Funds specialized in the recovery of loans. These funds take the responsibility for management of the borrower
companies or assets received as collateral with the objective of ensuring a pro-active management through the
implementation of plans to explore/increase the value of the companies/assets.
The specialized funds in credit recovery that acquired the financial assets are closed funds, in which the holders of the
participation units have no possibility to request the reimbursement of its participation units throughout the useful life
of the Fund. These participation units are held by several banks, which are the sellers of the loans, in percentages that
vary through the useful life of the Funds, ensuring however that, separately, none of the banks hold more than 50% of
the capital of the Fund.
The Funds have a specific management structure (General Partner), fully independent from the assignor banks and that
is selected on the date of establishment of the Fund. The management structure of the Fund has as main
responsibilities to: (i) determine the objective of the Fund and (ii) administrate and manage exclusively the Fund,
determining the objectives and investment policy and the conduct in management and business of the Fund. The
management structure is remunerated through management commissions charged to the Funds.
These funds (in which the Group holds minority positions) establish companies in order to acquire the loans to the
banks, which are financed through the issuance of senior and junior securities. The value of the senior securities fully
subscribed by the Funds that hold the share capital match the fair value of the asset sold, determined in accordance
with a negotiation based on valuations performed by both parties.
The value of the junior securities is equivalent to the difference between the fair value that was based on the valuation
of the senior security and the value of the transferred receivables. These junior securities, being subscribed by the
Group, will entitle the Group to a contingent positive value if the value of the assets transferred exceeds the amount of
the senior tranches plus the remuneration on them. Thus, considering these junior assets reflect a difference between
the valuations of the assets sold based on the appraisals performed by independent entities and the negotiation
between the parties, the Group performs the constitution of impairment losses for all of them.
Therefore, as a result of the transfer of assets occurred operations, the Group subscribed:
- Senior securities (participation units) of the funds, for which the cash-flows arise mainly from a set of assets
transferred from the participant banks. These securities are booked in Financial assets not held for trading mandatorily
at fair value through profit or loss portfolio and are accounted for at fair value based on the last available Net assets
value (NAV), as disclosed by the Management companies and audited at year end, still being analysed by the Bank;
- Junior securities (with higher subordination degree) issued by the Portuguese law companies held by the funds and
which are fully provided to reflect the best estimate of impairment of the financial assets transferred.
Within this context, not withholding control but maintaining an exposure to certain risks and rewards, the Group, in
accordance with IFRS 9 3.2 performed an analysis of the exposure to the variability of risks and rewards in the assets
transferred, before and after the transaction, having concluded that it does not hold substantially all the risks and
rewards. Considering that it does not hold control and does not exercise significant influence on the funds or
companies' management, the Group performed, under the scope of IAS IFRS 9 3.2, the derecognition of the assets
transferred and the recognition of the assets received.
The results are calculated on the date of transfer of the assets. During 2022 and 2021, no credits were sold to corporate
restructuring funds.

2022 REPORT & ACCOUNTS |

| 321
The amounts accumulated as at 31 December 2022 and 2021, related to these operations, are analysed as follows:

|  |  | (Thousands of euros)
| Assets transferred | Net assets transferred | Received value | Net gains / (losses)
Fundo Recuperação Turismo FCR (a) | 304,400 | 268,318 | 294,883 | 26,565
Fundo Reestruturação Empresarial FCR (b) | 84,112 | 82,566 | 83,212 | 646
FLIT-PTREL (c) | 577,803 | 399,900 | 383,821 | (16,079)
Fundo Recuperação FCR (b) | 343,266 | 243,062 | 232,267 | (10,795)
Fundo Aquarius FCR (c) | 132,635 | 124,723 | 132,635 | 7,912
Discovery Real Estate Fund (c) | 211,388 | 152,155 | 138,187 | (13,968)
Fundo Vega FCR (d) | 113,665 | 113,653 | 109,599 | (4,054)
| 1,767,269 | 1,384,377 | 1,374,604 | (9,773)

The activity segments are as follows: a) Tourism; b) Diversified; c) Real estate and tourism; and d) Real estate.
At the end of December 2022, the sale process called Project Crow was completed, which included the sale of 3 hotel
assets of the Fundo Recuperação and the sale of all the investments held in the FLIT-PTREL and Fundo Recuperação
Turismo.
As at 31 December 2022, the assets received under the scope of these operations are comprised of:

|  | (Thousands of euros) |
| 2022
| Senior securities | Junior securities |
| Participation units (note 24) | Capital supplies (note 32) | Total
Fundo Reestruturação Empresarial FCR |  |  |
Gross value | 60,963 | — | 60,963
Impairment and other fair value adjustments | (37,966) | — | (37,966)
| 22,997 | — | 22,997
Fundo Recuperação FCR |  |  |
Gross value | 169,033 | 85,018 | 254,051
Impairment and other fair value adjustments | (134,767) | (85,018) | (219,785)
| 34,266 | — | 34,266
Fundo Aquarius FCR |  |  |
Gross value | 119,631 | — | 119,631
Impairment and other fair value adjustments | (11,527) | — | (11,527)
| 108,104 | — | 108,104
Discovery Real Estate Fund |  |  |
Gross value | 157,716 | — | 157,716
Impairment and other fair value adjustments | (1,801) | — | (1,801)
| 155,915 | — | 155,915
Fundo Vega FCR |  |  |
Gross value | 48,762 | 86,379 | 135,141
Impairment and other fair value adjustments | (9,899) | (86,379) | (96,278)
| 38,863 | — | 38,863
Total Gross value | 556,105 | 171,397 | 727,502
Total impairment and other fair value adjustments | (195,960) | (171,397) | (367,357)
| 360,145 | — | 360,145

As at 31 December 2022, the book value of these assets considers the last Fund's Global Net Asset Value (NAV)
communicated by the Management Companies.

| 2022 REPORT & ACCOUNTS

322 |
The following aspects should also be mentioned: (i) these are Funds whose latest Limited Audit Reports available with
reference to 30 June 2022 and Audit Reports available with reference to 31 December 2022 for 2 funds and 31
December 2021 for 3 funds, do not include reserves; (ii) the funds are subject to supervision by the competent
authorities.
As at 31 December 2021, the assets received under the scope of these operations are comprised of:

|  |  | (Thousands of euros)
| 2021
| Senior securities | Junior securities |
| Participation units (note 24) | Capital supplies (note 32) | Capital supplementary contributions | Total
Fundo Recuperação Turismo FCR |  |  |  |
Gross value | 278,385 | 33,598 | — | 311,983
Impairment and other fair value adjustments | (92,482) | (33,598) | — | (126,080)
| 185,903 | — | — | 185,903
Fundo Reestruturação Empresarial FCR |  |  |  |
Gross value | 60,963 | — | 33,280 | 94,243
Impairment and other fair value adjustments | (36,415) | — | (33,280) | (69,695)
| 24,548 | — | — | 24,548
FLIT-PTREL |  |  |  |
Gross value | 250,662 | 38,154 | — | 288,816
Impairment and other fair value adjustments | (31,492) | (38,154) | — | (69,646)
| 219,170 | — | — | 219,170
Fundo Recuperação FCR |  |  |  |
Gross value | 188,771 | 82,617 | — | 271,388
Impairment and other fair value adjustments | (125,941) | (82,617) | — | (208,558)
| 62,830 | — | — | 62,830
Fundo Aquarius FCR |  |  |  |
Gross value | 120,162 | — | — | 120,162
Impairment and other fair value adjustments | (16,497) | — | — | (16,497)
| 103,665 | — | — | 103,665
Discovery Real Estate Fund |  |  |  |
Gross value | 157,716 | — | — | 157,716
Impairment and other fair value adjustments | (8,244) | — | — | (8,244)
| 149,472 | — | — | 149,472
Fundo Vega FCR |  |  |  |
Gross value | 48,454 | 83,302 | — | 131,756
Impairment and other fair value adjustments | (7,241) | (83,302) | — | (90,543)
| 41,213 | — | — | 41,213
Total Gross value | 1,105,113 | 237,671 | 33,280 | 1,376,064
Total impairment and other fair value adjustments | (318,312) | (237,671) | (33,280) | (589,263)
| 786,801 | — | — | 786,801

The supplementary capital contributions were initially recorded for the amount of Euros 33,280,000 and it was made a
negative fair value adjustment of the same amount.
The book value of these assets resulted from the last communication by the respective Management Company relating
the Global Net Asset Value (NAV) of the Fund which, as at 31 December 2021, corresponds to the NAV estimated with
reference to that date.

2022 REPORT & ACCOUNTS |

| 323
The following aspects should also be mentioned, among others: (i) for 3 funds the latest Audit Reports available (for 2
funds with reference to 31 December 2021 and for 1 fund with reference to 30 June 2021) do not include neither
reserves or emphasis; (ii) for 2 funds whose latest Limited Audit Reports available (with reference to 30 June 2021) and
the latest Audit Reports available (with reference to 31 December 2020) do not include reserves but includes an
emphasis related to the impacts and uncertainties of COVID-19 (for 1 fund); (iii) for 2 funds the latest Audit Reports
available (with reference to 31 December 2020) do not include reserves but includes an emphasis related to the
impacts and uncertainties of COVID-19 (for 1 fund); (iv) the funds are subject to supervision by the competent
authorities.
The detail of the commitments of subscribed and unpaid capital for each of the corporate restructuring funds is
analysed as follows:

|  |  |  |  | (Thousands of euros)
| 2022 | 2021
Corporate restructuring funds | Subscribed capital | Capital realized | Subscribed and unpaid capital | Subscribed capital | Capital realized | Subscribed and unpaid capital
Fundo Recuperação Turismo FCR | — | — | — | 292,000 | 278,385 | 13,615
Fundo Reestruturação Empresarial FCR | 51,212 | 46,486 | 4,726 | 51,212 | 46,486 | 4,726
FLIT-PTREL | — | — | — | 244,337 | 244,337 | —
Fundo Recuperação FCR | 186,602 | 169,033 | 17,569 | 206,805 | 188,771 | 18,034
Fundo Aquarius FCR | 134,205 | 119,631 | 14,574 | 134,801 | 120,162 | 14,639
Discovery Real Estate Fund | 158,991 | 158,991 | — | 158,991 | 158,991 | —
Fundo Vega FCR | 48,150 | 45,870 | 2,280 | 49,616 | 46,968 | 2,648
| 579,160 | 540,011 | 39,149 | 1,137,762 | 1,084,100 | 53,662

In 31 December 2022 and 2021, there are additional subscription commitments for the fund Discovery, in the amount of
Euros 1,107,000. In 2021 there were also commitments in the amount of Euros 15,248,000 for the fund FLIT-PTREL.
As previously mentioned, under the Project Crow, were sold 3 hotel assets of the Fundo Recuperação and the sale of all
the investments held in the FLIT-PTREL and Fundo Recuperação Turismo.
Additionally, are booked in Loans and advances to customer’s portfolio and in balances Guarantees granted and
Irrevocable credit lines, the following exposures and respective impairment, in relation to entities controlled by these
funds:

| (Thousands of euros)
Items | 2022 | 2021
Loans and advances to customers | 248,439 | 110,786
Guarantees granted and irrevocable credit lines | 74,834 | 41,244
Gross exposure | 323,273 | 152,030
Impairment | (15,183) | (22,445)
Net exposure | 308,090 | 129,585

| 2022 REPORT & ACCOUNTS

324 |
Project Crow
At the end of December 2022, the designated sale process for the Crow Project was completed, which included the sale
to a related company of Davidson Kempner Capital Management LP (Purchaser) of 3 hotel assets belonging to the Fundo
Recuperação and the sale of all shares/units of participation of the FLIT-PTREL and Fundo Recuperação Turismo funds,
together with the assets directly and indirectly held by these two funds, with the exception of a set of assets that were
transferred to the sellers and which, in the case of Banco Comercial Português, S.A. include the investment held in a
Venture capital fund, in 2 real estate funds and in a company, as detailed in the table below.

(Thousands of euros)
| 2022
Financial assets not held for trading mandatorily at fair value through profit or loss (note 24) |
Fundo Turismo Algarve, FCR | 50,426
Lusofundo - Fundo de Investimento Imobiliário Fechado | 26,429
Fundo Especial de Investimento Imobiliário Fechado Eurofundo | 12,091
| 88,946
Non-current assets held for sale (note 27) |
FLITPREL Tires, S.A. | 17,919
| 17,919
| 106,865

The sale value of the above-mentioned disposed assets amounted to Euros 233 million.
Considering that the Group had already booked provisions for the potential impacts arising from the reduction of
exposure to these assets, the completion of this transaction did not have a material impact on the consolidated results.
As referred in note 39, there are provisions for liabilities and charges recorded for corporate restructuring funds and
carved-out assets of the Project Crow, completed in December 2022.

2022 REPORT & ACCOUNTS |

| 325
48.Relevant events occurred during 2022
Registry of the new share capital
Banco Comercial Português, S.A. (“Bank”), in accordance with article 29-K of the Portuguese Securities Code and
article 1 of the CMVM Regulation no. 5/2008, hereby informs that, pursuant to the resolutions adopted at the General
Meeting of the Bank held on 20 December 2022 the Bank registered its new share capital of 3,000,000,000 Euros at the
Commercial Registry Office, maintaining the number of nominatives, book-entry shares without nominal value and of
the voting rights at 15,113,989,952.
Resolutions of the General Meeting of 20 December 2022
Banco Comercial Português, S.A. concluded on 20 December 2022, through electronic means and, simultaneously, at
the Bank's facilities, with 63.57% of the share capital represented, the General Meeting of Shareholders, with the
following resolutions:
Item One – Approval of the amendment to article 4 (1) of the articles of association (Share Capital) aiming at the
special purpose of reformulating the items of equity, comprising the reinforcement of funds able of being regulatory
qualified as distributable by means of the reduction of the share capital in 1,725,000,000 euros, without changing
either the existing number of shares or net equity;
Item Two - Ratification of the co-optation by the Board of Directors of 2 Directors for the 2022/2025 term of office;
Item Three - Election of an alternate member of the Audit Committee for the term of office 2022/2025.
Restructuring Funds
Banco Comercial Português, S.A. informs that after the conclusion, on 12 August 2022, of the sale and purchase
agreements and other agreements (the "Agreements") with a related company of Davidson Kempner Capital
Management LP (the "Purchaser"), together with Novo Banco, S.A., Caixa Geral de Depósitos, S.A., Banco Santander
Totta, S.A. and Oitante, S.A. (the "Sellers"), proceeded to the closing of the Project Crow and the implementation of
the Agreements were concluded on 29 December 2022, following the verification of the stipulated contractual
conditions precedent.
As a result of the closing of the Project Crow:
a.the Sellers’ units in “Fundo de Recuperação Turismo, Fundo de Capital de Risco (“FRT”) together with the assets
directly and indirectly held by FRT were transferred to the Purchaser;
b.the Sellers’ share in “FLIT – PTREL, SICAV-SIF, S.C.A. (“FLIT”) together with the assets directly and indirectly held
by FLIT were transferred to the Purchaser;
c.certain hospitality assets indirectly held by Fundo Recuperação, FCR were indirectly acquired by FLIT;
d.certain assets indirectly held by FLIT and FRT were transferred to relevant Sellers.

| 2022 REPORT & ACCOUNTS

326 |
Issue of senior preferred debt securities eligible for MREL
Banco Comercial Português, S.A. (“Bank”) hereby informs that it has fixed on 18 October 2022 the terms for a new issue
of senior preferred debt securities eligible for MREL (Minimum Requirement for own funds and Eligible Liabilities),
under its Euro Note Programme.
The issue, in the amount of Euros 350 million, will have a tenor of 3 years, with the option of early redemption by the
Bank at the end of year 2, an issue price of 100% and an annual interest rate of 8.5% during the first 2 years
(corresponding to a spread of 5.547% over the 2-year mid-swap rate). The annual interest rate for the 3rd year was set
at 3-month Euribor plus a 5.547% spread.
Minimum prudential requirements
Banco Comercial Português, S.A. (BCP) hereby informs that, under the context of the Supervisory Review and
Evaluation Process (SREP), it has been notified of the decision of the European Central Bank (ECB) regarding minimum
prudential requirements to be fulfilled on a consolidated basis from January 1, 2023.
In addition, BCP was previously informed by the Bank of Portugal on its capital buffer requirement as “other
systemically important institution” (O-SII).
The ECB’s decision prescribes the following minimum ratios as a percentage of total risk weighted assets (RWA) from
January 1, 2023:

| 30 September 2022 * | Minimum Capital Requirements
BCP Consolidated | Fully implemented | Capital requirements | of which:
Pilar 1 | Pilar 2 | Buffers
CET1 | 9.16% | 9.41% | 4.50% | 1.41% | 3.50%
T1 | 11.13% | 11.38% | 6.00% | 1.88% | 3.50%
Total | 13.75% | 14.00% | 8.00% | 2.50% | 3.50%

*Including unaudited earnings for the first nine months of 2022.
Buffers include the conservation buffer (2.5%), the countercyclical buffer (0%) and the buffer for other systemically
important institutions (O-SII: 1.0%).
Decision of not exercise the early redemption option on its T2 Notes due December 2027 and
about the announcement of an exchange offer on the same issue
As at 22 November 2022, Banco Comercial Português, S.A. (“BCP”) informs it has decided not to exercise the early
redemption option on its Euros 300,000,000 4.50% T2 Subordinated Fixed Rate Reset Notes due December 2027 (ISIN:
PTBCPWOM0034) (the “Notes”) on its one-time call date (7 December 2022). As such, and in accordance with the Final
Terms, the coupon would reset to the aggregate of the 5-year Mid-Swap Rate prevailing on 5 December 2022 and the
initial margin of 4.267% per annum.
The decision not to call the Notes has been taken after the evaluation of various factors, including current unusual
market conditions as well as the continued recognition of the Notes as Tier 2 capital and their MREL eligibility.
BCP also announced the launch of an exchange offer in respect to the above Notes, offering to that noteholders the
option and opportunity to exchange their holdings for new Euro denominated 10.25nc5.25 T2 notes in light of BCP’s
decision not to call the Notes.

2022 REPORT & ACCOUNTS |

| 327
Regarding the results of the Offer, BCP has received valid offers for exchange by noteholders for an aggregate nominal
amount of Euros 133,700,000. On 5 December 2022, BCP issued New Notes in the same amount, to be subscribed by
those noteholders that validly offered Notes for exchange.
The New Notes, in the amount of Euros 133,700,000, have a tenor of 10.25 years, with the option of early redemption
by the Bank during a period of three months at the end of year 5, and fixed annual interest rate of 8.75% during the
first 5.25 years. The annual interest rate from year 5.25 onwards was set at the 5-year mid-swap rate plus a 6.051%.
Upgrade of long-term issuer credit rating to 'BB+' by S&P Global Ratings
Banco Comercial Português, S.A. informs that S&P Global Ratings upgraded its long-term issuer credit rating by one
notch to ‘BB+’, keeping the Outlook stable.
This upgrade follows the recent upgrade on the sovereign rating, as well as the recent improvement of BCP credit risk
profile, result of the 40% reduction in NPEs since 2019 and the expectations from S&P Global Ratings that the
uncertainties in Poland will have a manageable impact on the level of the Bank’s capitalization.
The Outlook reflects the Bank’s solid retail franchise that should enable to strength domestic profitability.
Credit holidays for PLN mortgage borrowers (Bank Millennium)
Following the signing by the President of the Republic of Poland and announcement in the Journal of Laws of the
Republic of Poland on the same day of the Act of 7 July 2022 on crowdfunding for business ventures and assistance to
borrowers (‘the Act’), introducing, among others, a possibility of up to 8 months of credit holidays in 2022-2023 (‘credit
holidays’) for PLN mortgage borrowers, the Bank Millennium's Group recognized a one-off cost in the third quarter in
the amount of PLN 1,422.9 million (Euros 306.1 million) (of which PLN 1,384.6 million (Euros 297.9 million) related to
Bank Millennium, while the costs of PLN 38.3 million (Euros 8.2 million) were charged to Millennium Bank Hipoteczny
S.A.). The amount of the adjustment was originally calculated as the difference between the gross value of the loan
portfolio as at the calculation date and the current value of estimated cash flows under loan agreements, considering
80% of loan principals that will suspend the repayment instalment. As a result of the analysis of customer behaviour
carried out in December 2022, the Bank Millennium's Group adjusted the estimates of the percentage of loan principals
that will suspend repayment instalments to 68%. As a result of the above and the currently expected costs, the value of
the adjustment recognized in 2022 was reduced to PLN 1,324.2 million (Euros 282.8 million) (of which PLN 1,291.6
million (Euros 275.8 million) related to Bank Millennium, while costs in the amount of PLN 32.6 million (Euros 7 million)
were charged to Millennium Bank Hipoteczny S.A.), as detailed in note 11.
Launching of Recovery Plan and Capital Protection Plan (Bank Millennium)
On 15 July 2022, the Bank Millennium informed that due to expected costs of credit holidays it could be reasonably
assumed that the Bank Millennium would record a negative net result for the 3rd quarter of 2022 and as a result its
capital ratios could fall below the current minimum requirements set by Polish Financial Supervision Authority (‘PFSA’).
As the emergence of risk of a breach of respective capital ratios represents a prerequisite stipulated in the art. 142
sec. 1 and 2 of the Banking Act of 29 August 1997 (Journal of Laws 2021, item 2439, i.e. 28 December 2021, as
amended), on 15 July 2022 the Management Board of the Bank took a decision to launch the Recovery Plan, notifying of
the fact both PFSA and the Bank Guarantee Fund.
The Management Board of the Bank intends to increase capital ratios comfortably above the minimum required levels
through a combination of further improvement of operational profitability and capital optimisation initiatives such as
management of risk weighted assets (including securitisations).
Following the calculation of actual end of July 2022 capital ratios, pursuant to the Article 60 sec. 1 of the Act of 5
August 2015 on macroprudential supervision of the financial system and crisis management in the financial system
(Journal of Laws of 2022, item 963, i.e. of 6 May 2022, as amended), the Bank Millennium has also submitted to PFSA
the Capital Protection Plan.

| 2022 REPORT & ACCOUNTS

328 |
Demerger of Millennnium Dom Maklerski
The Bank Millennium, S.A. and Millennium Dom Maklerski (100% subsidiary of the Bank Millennium S.A.) decided on the
Demerger by way of the inclusion of the Brokerage Activity in the Bank Millennium’s structures in order to integrate
within a single entity the brokerage services so far provided through the Demerged Company. The decision to
effectuate the Demerger is dictated by:
- an interest in improving the efficiency of the operation of the brokerage activity in the Bank Millennium Group both in
the area of institutional and retail client services;
- efforts to increase the quality and comprehensiveness of the brokerage service offer addressed to both individual and
institutional clients.
The MDM Division was conducted in accordance with Article 529 § 1.4 of the CCC, i.e. by:
a) transferring to the Bank Millennium S.A. a part of the property (assets and liabilities) and the rights and obligations
of the Divided Company in the form of an organised part of the MDM's enterprise related to the provision of brokerage
services (the “Brokerage Business”); and
b) keeping in MDM the part of the property (assets and liabilities) and the rights and obligations of the Divided Company
in the form of an organised part of MDM's enterprise related to other activity not related to the brokerage services (the
“Non-Regulated Business”).
The division of MDM, as a result of which the Bank Millennium S.A. took over the Brokerage Business, took place and
was registered by the competent registry court on 29 July 2022.
Resolutions of the Annual General Meeting of Banco Comercial Português, S.A.
Banco Comercial Português, S.A. concluded on 4 May 2022, through electronic means and, simultaneously, at the Bank's
facilities, with 64.31% of the share capital represented, the Annual General Meeting of Shareholders, with the following
resolutions:
Item One – Approval of the individual and consolidated Annual Report, balance sheet and financial statements of 2021,
and the Corporate Governance Report, that includes a chapter on the remuneration of the management and supervisory
bodies and the Sustainability Report;
Item Two – Approval of the proposal for the appropriation of profit concerning the 2021 financial year;
Item Three – Approval of a vote of trust and praise addressed to the Board of Directors, including to the Executive
Committee and to the Audit Committee and each one of their members, as well as to the Chartered Accountant and its
representative;
Item Four – Approval of the updating of the policy for the remuneration of Members of the Management and Supervisory
Bodies;
Item Five – Approval of the update of the internal policy for the selection and assessment of the suitability of the
Members of the Management and Supervisory Bodies and Key-functions Holders;
Item Six – Approval of the update of the policy for selection and appointment of the Statutory Auditor or audit firm and
the hiring of non-prohibited non-audit services, under the terms of the legislation in force;
Item Seven – Approval of the proposal to amend the articles of association of Banco Comercial Português, S.A.;
Item Eight – Election of the Board of Directors for the 2022/2025 term of office, including the Audit Committee;
Item Nine – Election of the Remunerations and Welfare Board for the term-of-office 2022/2025;
Item Ten – Approval of the acquisition and sale of own shares and bonds.

2022 REPORT & ACCOUNTS |

| 329
Payment of the dividend relating to the 2021 financial year
By resolution of the Annual General Meeting, the dividend relating to the 2021 financial year was paid, with the
following amounts per share:
Gross unit dividend: Euros 0.0009
Taxation (withholding at source): IRS: 28% / IRC: 25%
Amount withheld at source IRS/IRC (if applicable): Euros 0.000252 / Euros 0.000225
Net dividend per share: Euros 0.000648 / Euros 0.000675
Upgrade to Investment Grade of senior unsecured debt ratings by Moody’s
Banco Comercial Português, S.A. informs that Moody’s rating agency, as part of its regular revision, upgraded BCP's
senior unsecured debt ratings to Investment Grade, from Ba1/Prime-2 to Baa3/Prime-2, driven by the reduction in the
stock of Non-performing assets (NPA) and the improvement in capitalization levels over the last years, the improvement
in domestic profitability, which offsets the impact of provisions for legal risk in Poland, as well as the BCP’s funding
plan being executed to comply with its Minimum Requirement for own funds and Eligible Liabilities (MREL), including
the Combined Buffer Requirement (CBR), from January 2024.
Simultaneously, the rating agency affirmed the bank's Baseline Credit Assessment (BCA) and Adjusted BCA at ba2; the
Banks’ deposit ratings at Baa2/Prime-2; the junior senior debt rating at (P)Ba2; the dated subordinated debt at (P)Ba3;
and its preference shares rating at B2(hyb).
The Outlook on the long-term deposit and senior unsecured debt ratings remains stable, reflecting Moody's view that
the Bank's creditworthiness will be steady over the outlook horizon.
Notification by Banco de Portugal of MREL requirements
Banco Comercial Português, S.A. has been notified by Banco de Portugal, as the national resolution authority, about the
establishment of its minimum requirement for own funds and eligible liabilities ("MREL" or "Minimum Requirement for
own funds and Eligible Liabilities") as decided by the Single Resolution Board.
The resolution strategy applied continues to be that of a multiple point of entry ("MPE"). The MREL requirements to be
met by BCP Group of Resolution (consisting of BCP, S.A., Banco ActivoBank, S.A. and all the subsidiary companies of
BCP apart from Bank Millennium S.A. and Banco Internacional de Moçambique and their respective subsidiaries), from 1
January 2024 is of:
–23.81% of the total risk exposure amount ("TREA") (to which adds further a combined buffer requirement
("CBR") of 3.5%, thus corresponding to total requirements of 27.31%); and
–6.92% of the leverage ratio exposure measure ("LRE").
Until the date mentioned before, BCP should comply with an interim requirement of:
–18.09% of TREA (to which adds a further 3.25% CBR requirement, thus corresponding to a total requirement of
21.34%); and
–6.92% of the LRE.
No subordination requirements have been applied to the Bank.
In accordance with the regulations in force, MREL requirements must be updated or reconfirmed annually, and
therefore these targets replace those previously set.
The MREL requirements, now communicated to the BCP resolution group described above, are in line with the 2021-24
Strategic Plan and are accommodated by the ongoing funding plan. As of 1 January 2022, BCP complied to the
intermediate MREL requirement set for that date, both as a percentage of the TREA (also including the applicable CBR)
and as a percentage of the LRE.

| 2022 REPORT & ACCOUNTS

330 |
MREL requirements of Bank Millennium, S.A.
Bank Millennium, S.A. received the joint decision of the resolution authorities obliging to meet MREL requirements. At
the moment of communication of the decision, Bank Millennium at the consolidated level is obliged to meet the
minimum MREL - TREA requirements of 15.60% and MREL - TEM of 3.00%. At the individual level, the minimum MREL -
TREA was set at 15.55% and MREL - TEM 3.00%. Additionally, the above-mentioned decision sets updated minimum
requirements that must be met by December 31, 2023, along with mid-term objectives.
Bank Millennium is still to meet MREL requirements due to the net loss booked in recent periods and the fact that an
issue of senior non-preferred bonds on the Polish market initially planned for 4Q21 was not possible to execute due to a
gap in the Polish bond law and later due to the combination of unfavourable market conditions (markets were
effectively shut for issuers of SNP bonds from the CEE region) and looming risk of Poland’s government enforcement of
costly extraordinary measures on the banking sector (credit holidays and replacement of WIBOR, among others).
Following the changes in the Polish bond law in May, Bank Millennium also started preparations for a domestic issue,
but due to the above-mentioned external factors, the decision to officially start the domestic offering was also put on
hold.
Bank Millennium prepared a Eurobond Issue Programme of the total nominal value not higher than Euros 3 billion and it
is monitoring the developments on the bond market that will allow for the issue.
Restoring capital ratios to minimum required ratios is currently the Bank Millennium’s priority and once this is achieved
the Bank will take the further needed steps aimed at meeting the MREL requirements.
In particular, as far as MREL requirements are concerned, Bank Millennium intends to close the gap by year-end 2023
through a combination of organic capital generation and issuance of debt instruments, if required and market
conditions allow.
Ukraine War
In 2022 the Russian Federation invaded Ukraine, as widely reported by supranational institutions and the media.
Although the Group´s direct exposure to those countries´ economies is immaterial, the level of uncertainty currently
prevailing as to a potential escalation of the conflict means that significant indirect impacts in subsequent stages
cannot be totally discarded. Such potential impacts, however, cannot be quantified or reliably projected at this stage.
Based on all the information available at the time, including that regarding the liquidity and capital situation, as well
as the value of the assets, it is considered that the going concern principle underlying the preparation of the financial
statements continues to apply.

2022 REPORT & ACCOUNTS |

| 331
49.Fair value
Fair value is based on market prices, whenever these are available. If market prices are not available, as occurs
regarding many products sold to clients, fair value is estimated through internal models based on cash-flow discounting
techniques. Cash-flows for the different instruments sold are calculated according to its financial characteristics and
the discount rates used include both the market interest rate curve and the current conditions of the Group's pricing
policy.
Thus, the fair value obtained is influenced by the parameters used in the evaluation model that have some degree of
judgment and reflects exclusively the value attributed to different financial instruments. However, it does not consider
prospective factors, as the future business evolution. Therefore, the values presented cannot be understood as an
estimate of the economic value of the Group.
The main methods and assumptions used in estimating the fair value for the financial assets and financial liabilities are
presented as follows:
Cash and deposits at Central Banks and Loans and advances to credit institutions repayable on
demand
Considering the short term of these financial instruments, the amount in the balance sheet is a reasonable estimate of
its fair value.
Loans and advances to credit institutions, Deposits from credit institutions and Assets with
repurchase agreements
The fair value of these financial instruments is calculated discounting the expected principal and interest future cash
flows for these instruments, considering that the payments of the instalments occur in the contractually defined dates.
This update is made based on the prevailing market rate for the term of each cash flow plus the average spread of the
production of the most recent 3 months of the same. For the elements with signs of impairment, the net impairment of
these operations is considered as a reasonable estimate of their fair value, considering the economic valuation that is
realized in the determination of this impairment.
For resources from Central Banks, it was considered that the book value is a reasonable estimate of its fair value, given
the nature of operations and the associated short-term. The rate of return of funding with the European Central Bank
was -0.6788% as at 31 December 2022 and -1% as at 31 December 2021.
For the remaining loans and advances and deposits, the discount rate used reflects the current conditions applied by
the Group on identical instruments for each of the different residual maturities (rates from the monetary market or
from the interest rate swap market).
Loans and advances to customers without defined maturity date
Considering the short maturity of these financial instruments, the conditions of the portfolio are similar to conditions
used at the date of the report. Therefore, the amount in the balance sheet is a reasonable estimate of its fair value.
Loans and advances to customers with defined maturity date
The fair value of these instruments is calculated by discounting the expected principal and interest future cash flows
for these instruments, considering that the payments of the instalments occur in the contractually defined dates. For
loans with signs of impairment, the net impairment of these operations is considered as a reasonable estimate of their
fair value, considering the economic valuation that is realized in the determination of this impairment.
The discount rate used is the one that reflects the current rates of the Group for each of the homogeneous classes of
this type of instruments and with similar residual maturity. The discount rate includes the market rates for the residual
maturity date (rates from the monetary market or from the interest rate swap market) and the spread used at the date
of the report, which was calculated from the average production of the three most recent months compared to the
reporting date.

| 2022 REPORT & ACCOUNTS

332 |
Resources from customers and other loans
The fair value of these financial instruments is calculated by discounting the expected principal and interest future
cash flows for the referred instruments, considering that payments occur in the contractually defined dates. The
discount rate used reflects the current conditions applied by the Group in similar instruments with a similar maturity.
The discount rate includes the market rates of the residual maturity date (rates of monetary market or the interest
rate swap market, at the end of the period) and the actual spread of the Group. This was calculated from the average
production of the three most recent months compared to the reporting date.
The average discount rates for Loans and advances to credit institutions, Loans and advances to customers, Resources
from credit institutions and Resources from customers are analysed as follows:

| Loans and advances to credit institutions | Loans and advances to customers | Resources from credit institutions | Resources from customers
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021
EUR | 2.44% | 0.26% | 5.15% | 2.27% | 3.38% | 0.38% | 2.77% | -0.21%
AOA | n.a. | 23.15% | n.a. | n.a. | n.a. | n.a. | n.a. | n.a.
AUD | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | 3.76% | 0.42%
CAD | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | 5.11% | 0.88%
CHF | n.a. | n.a. | 4.48% | 2.47% | n.a. | n.a. | 1.58% | -0.32%
CNY | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | 1.64% | 2.19%
DKK | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | 2.77% | -0.20%
GBP | n.a. | n.a. | n.a. | n.a. | 4.07% | n.a. | 4.18% | 0.47%
HKD | n.a. | n.a. | 4.73% | 0.80% | n.a. | n.a. | 3.89% | 0.02%
MOP | n.a. | n.a. | 4.17% | 1.19% | n.a. | n.a. | 4.89% | 0.28%
MZN | 19.51% | 14.78% | 22.59% | 17.96% | n.a. | n.a. | 15.99% | 11.25%
NOK | n.a. | n.a. | 6.19% | n.a. | n.a. | n.a. | 3.64% | 1.33%
PLN | 7.27% | 2.11% | 10.01% | 7.24% | 7.39% | 3.71% | 7.00% | 2.43%
SEK | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | 3.53% | 0.29%
USD | 5.41% | 0.60% | 5.74% | 2.70% | 5.52% | 0.41% | 4.51% | -0.11%
ZAR | 8.61% | 7.24% | 13.05% | n.a. | n.a. | n.a. | 5.45% | 3.11%

Financial assets and liabilities measured at fair value through profit or loss (except
derivatives), financial assets at fair value through other comprehensive income
These financial instruments are accounted for at fair value. Fair value is based on market prices ("Bid-price"), whenever
these are available. If market prices are not available, fair value is estimated through numerical models based on cash-
flow discounting techniques, using the market interest rate curve adjusted for factors associated, predominantly credit
risk and liquidity risk, determined in accordance with the market conditions and time frame.
Market interest rates are determined based on information released by the suppliers of financial content - Reuters and
Bloomberg - more specifically because of prices of interest rate swaps. The values for the very short-term rates are
obtained from similar sources but regarding interbank money market. The interest rate curve obtained is calibrated
with the values of interest rate short-term futures. Interest rates for specific periods of the cash flows are determined
by appropriate interpolation methods. The same interest rate curves are used in the projection of the non-
deterministic cash flows such as indexes.
When optionality is involved, the standard templates (Black-Scholes, Black, Ho and others) are used considering the
volatility areas applicable. Whenever there are no references in the market of sufficient quality or that the available
models do not fully apply to meet the characteristics of the financial instrument, specific quotations supplied by an
external entity are applied, typically a counterparty of the business.

2022 REPORT & ACCOUNTS |

| 333
Financial assets measured at amortised cost - Debt securities
These financial instruments are accounted at amortised cost net of impairment. Fair value is based on market prices,
whenever these are available. If market prices are not available, fair value is estimated through numerical models
based on cash-flow discounting techniques, using the market interest rate curve adjusted for factors associated,
predominantly credit risk and liquidity risk, determined in accordance with the market conditions and time frame.
Hedging and trading derivatives
All derivatives are recorded at fair value. In case of derivative contracts that are quoted in organised markets their
market prices are used. As for derivatives traded "Over-the-counter", it is applied methods based on numerical cash-
flow discounting techniques and models for assessment of options considering variables of the market, particularly the
interest rates on the instruments in question, and where necessary, their volatilities.
Market interest rates are determined based on information released by the suppliers of financial content - Reuters and
Bloomberg - more specifically because of prices of interest rate swaps. The values for the very short-term rates are
obtained from similar sources but regarding interbank money market. The interest rate curve obtained is calibrated
with the values of interest rate short-term futures. Interest rates for specific periods of the cash flows are determined
by appropriate interpolation methods. The same interest rate curves are used in the projection of the non-
deterministic cash flows such as indexes.
Debt securities non subordinated issued and subordinated debt
For these financial instruments the fair value was calculated for components for which fair value is not yet reflected in
the balance sheet. Fixed rate remunerated instruments for which the Group adopts "hedge-accounting", the fair value
related to the interest rate risk is already recognised. For the fair value calculation, other components of risk were
considered, in addition to the interest rate risk already recorded, when applicable. The fair value is based on market
prices, whenever these are available. If market prices are not available, fair value is estimated through numerical
models based on cash-flow discounting techniques, using the market interest rate curve adjusted by associated factors,
predominantly credit risk and trading margin, the latter only in the case of issues placed on non-institutional customers
of the Group.
As original reference, the Group applies the curves resulting from the market interest rate swaps for each specific
currency. The credit risk (credit spread) is represented by an excess from the curve of interest rate swaps established
specifically for each term and class of instruments based on the market prices on equivalent instruments.
For own issued debts placed among non-institutional customers of the Group, one more differential was added
(commercial spread), which represents the margin between the financing cost in the institutional market and the cost
obtained by distributing the respective instrument in the owned commercial network.

| 2022 REPORT & ACCOUNTS

334 |
The average of the reference rates of the yield curve obtained from the market prices of the different currencies used
in the determination of the fair value of the issues is analysed as follows:

| 2022 | 2021
| EUR | PLN | EUR | PLN
Placed in the institutional market |  |  |  |
Subordinated | 9.33% | — | 4.8% | —
Senior | 0.19% | — | 2.33% | —
Covered bonds | — | — | -0.08% | —
Placed in retail |  |  |  |
Senior and collateralised | 3.37% | 6.19% | 0.12% | 3.63%

For non subordinated debt securities issued, the fair value calculation focused on all the components of these
instruments, as a result the difference determined is a positive amount of Euros 72,475,000 (31 December 2021: a
positive amount of Euros 11,616,000) and includes a payable amount of Euros 53,495,000 (31 December 2021: a payable
amount of Euros 6,365,000) which reflects the fair value of embedded derivatives and are recorded in financial assets
and liabilities held for trading (note 24 and 37).
The following table presents the interest rates used in the definition of the interest rate curves of main currencies,
namely EUR, USD, GBP and PLN used to determine the fair value of the financial assets and liabilities of the Group:

| 2022 | 2021
| EUR | USD | GBP | PLN | EUR | USD | GBP | PLN
1 day | 2.00% | 4.45% | 3.55% | 6.76% | -0.59% | 0.11% | 0.19% | 1.99%
7 days | 2.00% | 4.47% | 3.58% | 6.76% | -0.59% | 0.14% | 0.21% | 1.99%
1 month | 2.04% | 4.57% | 3.67% | 6.83% | -0.56% | 0.14% | 0.25% | 2.13%
2 months | 2.13% | 4.66% | 3.80% | 6.87% | -0.56% | 0.16% | 0.32% | 2.28%
3 months | 2.25% | 4.77% | 3.91% | 6.92% | -0.56% | 0.21% | 0.38% | 2.44%
6 months | 2.73% | 5.07% | 4.32% | 7.04% | -0.54% | 0.33% | 0.56% | 2.74%
9 months | 3.11% | 5.28% | 4.65% | 7.09% | -0.51% | 0.47% | 0.76% | 2.89%
1 year | 3.26% | 5.11% | 4.87% | 7.35% | -0.49% | 0.52% | 0.89% | 3.71%
2 years | 3.39% | 4.69% | 4.69% | 6.97% | -0.30% | 0.92% | 1.20% | 3.93%
3 years | 3.31% | 4.33% | 4.56% | 6.53% | -0.15% | 1.15% | 1.30% | 3.88%
5 years | 3.23% | 4.02% | 4.33% | 6.20% | 0.02% | 1.34% | 1.29% | 3.74%
7 years | 3.19% | 3.89% | 4.14% | 6.13% | 0.13% | 1.45% | 1.24% | 3.63%
10 years | 3.21% | 3.82% | 3.99% | 6.20% | 0.30% | 1.56% | 1.21% | 3.54%
15 years | 3.14% | 3.79% | 3.91% | 6.45% | 0.49% | 1.68% | 1.18% | 3.74%
20 years | 2.93% | 3.72% | 3.84% | 6.49% | 0.55% | 1.74% | 1.15% | 3.86%
30 years | 2.54% | 3.48% | 3.70% | 6.49% | 0.48% | 1.72% | 1.10% | 3.86%

2022 REPORT & ACCOUNTS |

| 335
The following table shows the fair value of financial assets and liabilities of the Group, as at 31 December 2022:

|  |  |  | (Thousands of euros)
| 2022
| Fair value through profit or loss | Fair value through other comprehensive income | Amortised cost | Book value | Fair value
Assets |  |  |  |  |
Cash and deposits at Central Banks | — | — | 6,022,001 | 6,022,001 | 6,022,001
Loans and advances to credit institutions repayable on demand | — | — | 213,460 | 213,460 | 213,460
Financial assets at amortised cost |  |  |  |  |
Loans and advances to credit institutions | — | — | 963,434 | 963,434 | 953,643
Loans and advances to customers (i) | — | — | 54,675,793 | 54,675,793 | 53,436,993
Debt securities | — | — | 13,035,582 | 13,035,582 | 11,737,987
Financial assets at fair value through profit or loss |  |  |  |  |
Financial assets held for trading | 766,597 | — | — | 766,597 | 766,597
Financial assets not held for trading mandatorily |  |  |  |  |
at fair value through profit or loss | 552,679 | — | — | 552,679 | 552,679
Financial assets at fair value through |  |  |  |  |
other comprehensive income | — | 7,461,553 | — | 7,461,553 | 7,461,553
Hedging derivatives (ii) | 59,703 | — | — | 59,703 | 59,703
| 1,378,979 | 7,461,553 | 74,910,270 | 83,750,802 | 81,204,616
Liabilities |  |  |  |  |
Financial liabilities at amortised cost |  |  |  |  |
Resources from credit institutions | — | — | 1,468,360 | 1,468,360 | 1,453,270
Resources from customers (i) | — | — | 75,430,143 | 75,430,143 | 75,129,795
Non subordinated debt securities issued (i) | — | — | 1,482,086 | 1,482,086 | 1,554,561
Subordinated debt (i) | — | — | 1,333,056 | 1,333,056 | 1,305,013
Financial liabilities at fair value through profit or loss |  |  |  |  |
Financial liabilities held for trading | 241,506 | — | — | 241,506 | 241,506
Financial liabilities designated |  |  |  |  |
at fair value through profit or loss | 1,817,678 | — | — | 1,817,678 | 1,817,678
Hedging derivatives (ii) | 178,000 | — | — | 178,000 | 178,000
| 2,237,184 | — | 79,713,645 | 81,950,829 | 81,679,823

(i)- The book value includes the effect of the adjustments resulting from the application of hedge accounting;
(ii) - Includes a portion that is recognised in reserves in the application of accounting cash flow hedge.

| 2022 REPORT & ACCOUNTS

336 |
The following table shows the fair value of financial assets and liabilities of the Group, as at 31 December 2021:

|  |  |  | (Thousands of euros)
| 2021
| Fair value through profit or loss | Fair value through other comprehensive income | Amortised cost | Book value | Fair value
Assets |  |  |  |  |
Cash and deposits at Central Banks | — | — | 7,796,299 | 7,796,299 | 7,796,299
Loans and advances to credit institutions repayable on demand | — | — | 361,786 | 361,786 | 361,786
Financial assets at amortised cost |  |  |  |  |
Loans and advances to credit institutions | — | — | 453,213 | 453,213 | 411,867
Loans and advances to customers (i) | — | — | 54,972,401 | 54,972,401 | 54,310,839
Debt securities | — | — | 8,205,196 | 8,205,196 | 8,245,752
Financial assets at fair value through profit or loss |  |  |  |  |
Financial assets held for trading | 931,485 | — | — | 931,485 | 931,485
Financial assets not held for trading mandatorily |  |  |  |  |
at fair value through profit or loss | 990,938 | — | — | 990,938 | 990,938
Financial assets at fair value through |  |  |  |  |
other comprehensive income | — | 12,890,988 | — | 12,890,988 | 12,890,988
Hedging derivatives (ii) | 109,059 | — | — | 109,059 | 109,059
| 2,031,482 | 12,890,988 | 71,788,895 | 86,711,365 | 86,049,013
Liabilities |  |  |  |  |
Financial liabilities at amortised cost |  |  |  |  |
Resources from credit institutions | — | — | 8,896,074 | 8,896,074 | 8,897,337
Resources from customers (i) | — | — | 69,560,227 | 69,560,227 | 69,553,730
Non subordinated debt securities issued (i) | — | — | 2,188,363 | 2,188,363 | 2,199,979
Subordinated debt (i) | — | — | 1,394,780 | 1,394,780 | 1,486,659
Financial liabilities at fair value through profit or loss |  |  |  |  |
Financial liabilities held for trading | 231,241 | — | — | 231,241 | 231,241
Financial liabilities designated |  |  |  |  |
at fair value through profit or loss | 1,581,778 | — | — | 1,581,778 | 1,581,778
Hedging derivatives (ii) | 377,206 | — | — | 377,206 | 377,206
| 2,190,225 | — | 82,039,444 | 84,229,669 | 84,327,930

(i) - The book value includes the effect of the adjustments resulting from the application of hedge accounting;
(ii) - Includes a portion that is recognised in reserves in the application of accounting cash flow hedge.
The Group classified the financial instruments recorded in the balance sheet at fair value in accordance with the
hierarchy established in IFRS 13. The fair value of financial instruments is determined using quotations recorded in
active and liquid markets, considering that a market is active and liquid whenever its stakeholders conduct transactions
on a regular basis giving liquidity to the instruments traded. When it is verified that there are no transactions that
regularly provide liquidity to the traded instruments, valuation methods and techniques are used to determine the fair
value of the financial instruments.

2022 REPORT & ACCOUNTS |

| 337
Level 1 - With quotation in active market
In this category are included, in addition to financial instruments traded on a regulated market, bonds and units of
investment funds valued based on the prices disclosed through trading systems.
The classification of the fair value of level 1 is used when:
i) - There is a firm daily enforceable quotation for the financial instruments concerned, or;
ii) - There is a quotation available in market information systems that aggregate multiple prices of various stakeholders,
or;
iii) - Financial instruments have been classified in level 1, at least 90% of trading days in the year (at the valuation
date).
Level 2 - Valuation methods and techniques based on market data
Financial instruments, when there are no regular transactions in the active and liquid markets (level 1), are classified in
level 2, according to the following rules:
i) - Failure to comply with the rules defined for level 1, or;
ii) - They are valued based on valuation methods and techniques that use mostly observable market data (interest rate
or exchange rate curves, credit curves, etc.).
Level 2 includes over-the-counter derivative financial instruments contracted with counterparties with which the Bank
maintains collateral agreements (ISDAs with Credit Support Annex (CSA)), in particular with MTA (Minimum Transfer
Amount) which contributes to the mitigation of the counterparty credit risk, so that the CVA (Credit Value Adjustment)
component is not significant. In addition, derivative financial instruments traded in the over-the-counter market,
which, despite not having CSA agreements, the non-observable market data component (i.e. internal ratings, default
probabilities determined by internal models, etc.) incorporated in valuation of CVA is not significant in the value of the
derivative as a whole. In order to assess the significance of this component, the Bank defined a quantitative relevance
criterion and performed a qualitative sensitivity analysis on the valuation component that includes unobservable
market data.
Level 3 - Valuation methods and techniques based on data not observable in the market
If the level 1 or level 2 criteria are not met, financial instruments should be classified in level 3, as well as in situations
where the fair value of financial instruments results from the use of information not observable in the market, such as:
- financial instruments which are not classified as level 1 and which are valued using evaluation methods and
techniques without being known or where there is consensus on the criteria to be used, namely:
i) - They are valued using comparative price analysis of financial instruments with risk and return profile, typology,
seniority or other similar factors, observable in the active and liquid markets;
ii) - They are valued based on performance of impairment tests, using performance indicators of the underlying
transactions (e.g. default probability rates of the underlying assets, delinquency rates, evolution of the ratings, etc.);
iii) - They are valued based on NAV (Net Asset Value) disclosed by the management entities of securities/real estate/
other investment funds not listed on a regulated market.
Level 3 includes over-the-counter derivative financial instruments that have been contracted with counterparties with
which the Bank does not maintain collateral exchange agreements - CSA), and whose unobservable market data
component incorporated in the valuation of CVA is significant in the value of the derivative as a whole. In order to
assess the significance of this component, the Bank defined a quantitative relevance criterion and performed a
qualitative sensitivity analysis on the valuation component that includes unobservable market data.

| 2022 REPORT & ACCOUNTS

338 |
The following table shows, by valuation levels, the fair value of financial assets and liabilities of the Group as at 31
December 2022:

(Thousands of euros)
| 2022
| Level 1 | Level 2 | Level 3 | Total
Assets |  |  |  |
Cash and deposits at Central Banks | 6,022,001 | — | — | 6,022,001
Loans and advances to credit institutions repayable on demand | 213,460 | — | — | 213,460
Financial assets at amortised cost |  |  |  |
Loans and advances to credit institutions | — | — | 953,643 | 953,643
Loans and advances to customers | — | — | 53,436,993 | 53,436,993
Debt securities | 8,981,294 | 665,221 | 2,091,472 | 11,737,987
Financial assets at fair value through profit or loss |  |  |  |
Financial assets held for trading | 389,954 | 81,347 | 295,296 | 766,597
Financial assets not held for trading mandatorily |  |  |  |
at fair value through profit or loss | — | — | 552,679 | 552,679
Financial assets at fair value through other comprehensive income | 6,489,282 | 322,514 | 649,757 | 7,461,553
Hedging derivatives | — | 59,703 | — | 59,703
| 22,095,991 | 1,128,785 | 57,979,840 | 81,204,616
Liabilities |  |  |  |
Financial liabilities at amortised cost |  |  |  |
Resources from credit institutions | — | — | 1,453,270 | 1,453,270
Resources from customers | — | — | 75,129,795 | 75,129,795
Non subordinated debt securities issued | — | — | 1,554,561 | 1,554,561
Subordinated debt | — | — | 1,305,013 | 1,305,013
Financial liabilities at fair value through profit or loss |  |  |  |
Financial liabilities held for trading | — | 186,130 | 55,376 | 241,506
Financial liabilities designated at fair value through profit or loss | 850,681 | — | 966,997 | 1,817,678
Hedging derivatives | — | 178,000 | — | 178,000
| 850,681 | 364,130 | 80,465,012 | 81,679,823

2022 REPORT & ACCOUNTS |

| 339
The following table shows, by valuation levels, the fair value of financial assets and liabilities of the Group as at 31
December 2021:

(Thousands of euros)
| 2021
| Level 1 | Level 2 | Level 3 | Total
Assets |  |  |  |
Cash and deposits at Central Banks | 7,796,299 | — | — | 7,796,299
Loans and advances to credit institutions repayable on demand | 361,786 | — | — | 361,786
Financial assets at amortised cost |  |  |  |
Loans and advances to credit institutions | — | — | 411,867 | 411,867
Loans and advances to customers | — | — | 54,310,839 | 54,310,839
Debt securities | 1,768,269 | 761,886 | 5,715,597 | 8,245,752
Financial assets at fair value through profit or loss |  |  |  |
Financial assets held for trading | 499,147 | 169,181 | 263,157 | 931,485
Financial assets not held for trading mandatorily |  |  |  |
at fair value through profit or loss | — | — | 990,938 | 990,938
Financial assets at fair value through other comprehensive income | 12,463,415 | 303,629 | 123,944 | 12,890,988
Hedging derivatives | — | 109,059 | — | 109,059
| 22,888,916 | 1,343,755 | 61,816,342 | 86,049,013
Liabilities |  |  |  |
Financial liabilities at amortised cost |  |  |  |
Resources from credit institutions | — | — | 8,897,337 | 8,897,337
Resources from customers | — | — | 69,553,730 | 69,553,730
Non subordinated debt securities issued | — | — | 2,199,979 | 2,199,979
Subordinated debt | — | — | 1,486,659 | 1,486,659
Financial liabilities at fair value through profit or loss |  |  |  |
Financial liabilities held for trading | — | 221,040 | 10,201 | 231,241
Financial liabilities designated at fair value through profit or loss | 961,730 | — | 620,048 | 1,581,778
Hedging derivatives | — | 377,206 | — | 377,206
| 961,730 | 598,246 | 82,767,954 | 84,327,930

| 2022 REPORT & ACCOUNTS

340 |
For financial assets classified at level 3 recorded in the balance sheet at fair value, the changes occurred during 2022 is
presented as follows:

|  |  | (Thousands of euros)
| 2022
| Financial assets |
| Held for trading | Not held for trading mandatorily at fair value through profit or loss | At fair value through other comprehensive income | Financial liabilities held for trading (*)
Balance as at 1 January | 263,157 | 990,938 | 123,944 | 6,576
Gains / (losses) recognised in profit or loss |  |  |  |
Results on financial operations | (10,027) | (90,286) | — | 47,221
Net interest income | — | 6,109 | — | —
Transfers between levels | (1,860) | — | — | (145)
Purchases / (Sales, repayments or amortisations) | 44,028 | (351,744) | 528,922 | 702
Gains / (losses) recognised in reserves | — | — | (4,138) | —
Exchange differences | — | (2,338) | 1,061 | —
Accruals of interest | (2) | — | (32) | —
Balance as at 31 December | 295,296 | 552,679 | 649,757 | 54,354

(*) Do not include short sales in the amount of Euros 1,022,000 (note 37).
For financial assets classified at level 3 recorded in the balance sheet at fair value, the changes occurred during 2021 is
presented as follows:

|  |  | (Thousands of euros)
| 2021
| Financial assets |
| Held for trading | Not held for trading mandatorily at fair value through profit or loss | At fair value through other comprehensive income | Financial liabilities held for trading (*)
Balance as at 1 January | 291,273 | 1,315,467 | 160,377 | 7,153
Gains / (losses) recognised in profit or loss |  |  |  |
Results on financial operations | (9,319) | (8,185) | — | 12
Net interest income | — | 12,137 | — | —
Transfers between levels | 1,278 | — | (42,615) | (2,763)
Purchases / (Sales, repayments or amortisations) | (20,076) | (326,667) | 3,650 | 2,174
Gains / (losses) recognised in reserves | — | — | (99) | —
Exchange differences | — | (1,770) | 2,653 | —
Accruals of interest | 1 | (44) | (22) | —
Balance as at 31 December | 263,157 | 990,938 | 123,944 | 6,576

(*) Do not include short sales in the amount of Euros 3,625,000 (note 37).

2022 REPORT & ACCOUNTS |

| 341
50.Post-employment benefits and other long-term benefits
The Group assumed the liability to pay to their employees' pensions on retirement or disability and other obligations, in
accordance with the accounting policy described in note 1 R.
As at 31 December 2022 and 2021, the number of participants in the Pension Fund of Banco Comercial Português
covered by this pension plan and other benefits is analysed as follows:

Number of participants | 2022 | 2021
Pensioners | 17,111 | 17,177
Former Attendees Acquired Rights | 3,495 | 3,539
Employees | 6,370 | 6,407
| 26,976 | 27,123

In accordance with the accounting policy described in note 1 R, the Group's retirement pension liabilities and other
benefits and the respective coverage, based on the Projected Unit Credit method are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Actual amount of the past services |  |
Pensioners | 2,126,809 | 2,454,361
Former attendees acquired rights | 161,387 | 255,662
Employees | 502,428 | 787,599
| 2,790,624 | 3,497,622
Pension fund value | (3,384,118) | (3,699,988)
Net (assets) / liabilities in balance sheet (note 32) | (593,494) | (202,366)
Accumulated actuarial deviations and changing assumptions |  |
effect recognised in Other comprehensive income | 3,152,535 | 3,528,224

In 2017, following the authorization of the Insurance and Pension Funds Supervisory Authority, the BCP group's pension
fund agreement was amended. The main purpose of this process was to incorporate into the pension fund the changes
made to the Group's Collective Labour Agreement (CLA) in terms of retirement benefits and to pass on to the pension
fund the responsibilities that were directly in charge by the companies (extra-fund liabilities). The pension fund has a
share exclusively related to the financing of these liabilities, which under the scope of the fund is called an Additional
Complement, which as at 31 December 2022 amounts to Euros 197,486,000 (31 December 2021: Euros 260,168,000).
The End of Career Premium also came to be borne by the pension fund under the basic pension plan.
In 2022, negotiations continued with all the unions subscribing to the Group's Collective Labour Agreements, for the
conclusion of the full review of the respective clauses, negotiations which are still ongoing.
At the same time, negotiations took place with all the unions subscribed to the Group's Collective Labour Agreements
for the revision of the Salary Tables and other clauses of pecuniary expression relative to the years of 2021 and 2022,
having been agreed on 20 June and 1 July with all the unions subscribed to the Group's Collective Labour Agreements,
the update of the Salary Tables and the Bank's Contributions to SAMS in 2021 by 0.50%, and the increase of 0.50% of
other clauses of pecuniary expression, such as lunch subsidy, diuturnities, among others. The agreed updates take
effect on 1 January 2021, with the exception of compensation for subsistence and travel allowances, which will be
updated after the agreed updates are operational.

| 2022 REPORT & ACCOUNTS

342 |
Regarding the revision of the Salary Tables and other clauses of pecuniary expression for 2022, it was agreed on 20 June
with the unions "Mais Sindicato do Sector Financeiro", "SBC – Sindicato Bancários do Centro" and "SBN - Sindicato dos
Trabalhadores do Sector Financeiro de Portugal", the update of Salary Tables by 1.10% up to and including level 13, and
0.70% for level 14 and beyond. An increase of 1.10% was agreed for the Bank's contributions to SAMS and other
pecuniary expression clauses, and an increase of 7.14% was agreed for the lunch subsidy, whose daily value was
increased to Euros 10.50. The agreed updates were effective on 1 January 2022, with exception of compensation for
subsistence and travel allowances, which were effective after the agreed updates became operational.
Regarding "SNQTB – Sindicato Nacional dos Quadros e Técnicos Bancários", "SIB – Sindicato Independente da Banca", an
agreement has not yet been reached on the proposal presented by the Group on 22 June, the content of which
corresponds to what was agreed with the other unions, hence the negotiations are still ongoing. Although no agreement
has yet been reached with these unions, all Bank employees benefit from the same conditions.
The change in the projected benefit obligations is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Balance as at 1 January | 3,497,622 | 3,657,527
Service cost | (11,727) | (14,466)
Interest cost / (income) | 67,059 | 43,034
Actuarial losses / (gains) |  |
Not related to changes in actuarial assumptions | 58,590 | 57,564
Related to changes in assumptions | (693,673) | (167,476)
Payments | (136,338) | (122,563)
Early retirement programmes and terminations by mutual agreement | 2,223 | 36,583
Contributions of employees | 6,868 | 7,451
Transfer from / (to) other plans | — | (32)
Balance at the end of the year | 2,790,624 | 3,497,622

As at 31 December 2022, the pensions paid by the Fund, including the Additional Complement, amounts to Euros
136,338,000 (31 December 2021: Euros 122,563,000).
The liabilities with health benefits are fully covered by the Pension Fund and correspond to Euros 241,345,000 as at 31
December 2022 (31 December 2021: Euros 311,161,000).
Additionally, regarding the coverage of some benefit obligations related to pensions, the Bank contracted with
Ocidental Vida the acquisition of perpetual annuities for which the total liability as at 31 December 2022 amounts to
Euros 39.093,000 (31 December 2021: Euros 40,811,000), in order to pay:
i) pensions of former Group's Board Members in accordance with the Bank's Board Members Retirement Regulation;
ii) pensions and complementary pensions to pensioners in accordance with the Pension Fund of the BCP Group
employees established in 28 December 1987, as also to pensioners, in accordance with other Pension Funds, that were
incorporated after on the BCP Group Pension Fund and which were planed that the retirement benefits should be paid
through the acquisition of insurance policies, in accordance with the Decree - Law no. 12/2006.
Ocidental Vida is 100% owned by Ageas Group and Ageas Group is 49% owned by the BCP Group.

2022 REPORT & ACCOUNTS |

| 343
During 2022 and 2021, the changes occurred in the plan's assets value is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Balance as at 1 January | 3,699,988 | 3,750,567
Employees' contributions | 6,868 | 7,451
Actuarial gains / (losses) | (259,394) | 25,374
Payments | (136,338) | (122,563)
Expected return on plan assets | 72,988 | 38,606
Amount transferred to the Fund resulting from acquired rights unassigned related to the Complementary Plan | 6 | 586
Others | — | (33)
Balance at the end of the year | 3,384,118 | 3,699,988

The elements of the Pension Fund's assets are analysed as follows:

|  |  |  |  | (Thousands of euros)
| 2022 | 2021
Asset class | Assets with market price in active market | Remaining | Total Portfolio | Assets with market price in active market | Remaining | Total Portfolio
Shares | 96,817 | 1,183 | 98,000 | 397,322 | 1,098 | 398,420
Bonds and other fixed income securities | 1,120,132 | — | 1,120,132 | 1,377,330 | 4,820 | 1,382,150
Participations units in investment funds | — | 969,232 | 969,232 | — | 1,186,146 | 1,186,146
Participation units in real estate funds | — | 308,404 | 308,404 | — | 304,736 | 304,736
Properties | — | 275,493 | 275,493 | — | 239,838 | 239,838
Loans and advances to credit institutions and others | — | 612,857 | 612,857 | — | 188,698 | 188,698
| 1,216,949 | 2,167,169 | 3,384,118 | 1,774,652 | 1,925,336 | 3,699,988

As at 31 December 2022, the balance Properties includes buildings booked in the Fund's financial statements and used
by the Group's companies which amounts to Euros 275,493,000 (31 December 2021: Euros 239,838,000).
The securities issued by Group's companies accounted in the portfolio of the Fund are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Shares | 4,301 | 4,140
Bonds and other fixed income securities | 2,805 | 15,386
Loans and advances to credit institutions and others | 128,476 | 170,115
| 135,582 | 189,641

| 2022 REPORT & ACCOUNTS

344 |
The evolution of net (assets) / liabilities in the balance sheet is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Balance as at 1 January | (202,366) | (93,040)
Recognised in the income statement: |  |
Service cost | (11,727) | (14,466)
Interest cost / (income) net of the balance liabilities coverage | (5,929) | 4,428
Cost with early retirement programs | 2,223 | 36,583
Amount transferred to the Fund resulting from acquired rights |  |
unassigned related to the Complementary Plan | (6) | (586)
| (15,439) | 25,959
Recognised in the statement of comprehensive income: |  |
Actuarial (gains) / losses |  |
Not related to changes in actuarial assumptions |  |
Difference between the estimated and the actual income of the fund | 259,394 | (25,374)
Difference between expected and effective obligations | 58,590 | 57,564
Arising from changes in actuarial assumptions | (693,673) | (167,475)
| (375,689) | (135,285)
Balance at the end of the year | (593,494) | (202,366)

The estimate of contributions to be made in 2023, by the employees, for the Defined Benefit Plan amount to Euros
7,024,000.
In accordance with IAS 19, the Group accounted for (income)/costs with post-employment benefits, which is analysed
as follows:

| (Thousands of euros)
| 2022 | 2021
Current service cost | (11,727) | (14,466)
Net interest cost in the liability coverage balance | (5,929) | 4,428
Cost with early retirement programs | 2,223 | 36,583
Amount transferred to the Fund resulting from acquired rights unassigned related to the Complementary Plan | (6) | (586)
(Income) / Cost of the year | (15,439) | 25,959

Within the framework of the three-party agreement between the Government, the Banking and the Trade Unions, the
bank's employees in activity as at 31 December 2010 under the CAFEB / CLA regime were integrated into the General
Social Security System (RGSS) with effect from 1 January 2011. The integration led to an effective decrease in the
present value of the total benefits reported at the retirement age to be borne by the Pension Fund, and this effect is
recorded on a straight-line basis over the average period of active life until the normal retirement age is reached. The
calculation of the liability for pensions carried out periodically by the actuary considers this effect and is calculated
considering the actuarial assumptions in force, ensuring that the liabilities calculated with reference to 31 December
2010, not considering the effect of the integration of bank employees into the General Social Security Scheme are fully
covered and deducted from the amount of the effect recognised until the date. The component of this effect for the
year is recognised under the heading "Current service costs".

2022 REPORT & ACCOUNTS |

| 345
Board of Directors Plan
As the Board of Directors Retirement Regulation establish that the pensions are subjected to an annual update, and as
it is not common in the insurance market the acquisition of perpetual annuities including variable updates in pensions,
the Bank determined, the liability to be recognised on the financial statements related to that update, taking into
consideration current actuarial assumptions.
In accordance with the remuneration policy of the Board Members, the Group has the responsibility of supporting the
cost with: i) the retirement pensions of former Group's Executive Board Members; and ii) the Complementary Plan for
these members in accordance with the applicable rules funded through the Pension Fund, Extra-fund and perpetual
annuities.
In order to cover liabilities with pensions to former members of the Executive Board of Directors, under the Bank's
Board of Directors Retirement Regulation the Bank contracted with Ocidental Vida to purchase immediate life annuity
insurance policies.
Assumptions used in the liability's assessment
Considering the market indicators, particularly the inflation rate estimates and the long-term interest rate for Euro
Zone, as well as the demographic characteristics of its employees, the Group considered the following actuarial
assumptions for calculating the liabilities with pension obligations:

| 2022 | 2021
Salary growth rate (c) | 3,75% in 2023; 2,25% in 2024 and 1% in the following years | 0.75%
Pension's growth rate (c) | 3,5% in 2023; 2% in 2024 and 0.75% in the following years | 0.50%
Discount rate / Projected Fund's rate of return | 4.17% | 1.35%
Mortality tables |  |
Men | TV 88/90 less a year | TV 88/90
Women (a) | TV 99/01 less 2 years | TV 88/90 less 3 years
Disability rate | Non applicable | Non applicable
Turnover rate | Non applicable | Non applicable
Normal retirement age (b) | 66 years and 7 months | 66 years and 6 months
Total salary growth rate for Social Security purposes | 1.75% | 1.75%
Revaluation rate of wages / pensions of Social Security | 1% | 1%

a)The mortality table considered for women corresponds to TV 99/01 adjusted in less than 2 years (which implies an
increase in hope life expectancy compared to that which would be considered in relation to their effective age).
b)Retirement age is variable. The normal retirement age increases one month for each civil year and cannot be higher
than the normal retirement age in force in the General Social Security Regime (RGSS). The normal retirement age in
the RGSS is variable and depends on the evolution of the average life expectancy at 65 years of age.
For 2021, the retirement age is 66 years and 6 months, for 2022 it is 66 years and 7 months. For 2023, due to the
evolution of the average life expectancy at 65 years in Portugal and, consequently, the reduction of the normal
retirement age in RGSS, the estimate of the normal retirement age was reduced to 66 years and 4 months.
For the projection of life expectancy’s increment, it was considered an increase of one year in every 10 years, with
the maximum retirement age being set at 67 years and 2 months.
c)This rate refers to the growth for the years following the reporting year.
The assumptions used on the calculation of the actuarial value of the liabilities are in accordance with the
requirements of IAS 19. No disability decreases are considered in the calculation of the liabilities.

| 2022 REPORT & ACCOUNTS

346 |
The discount rate used to update the Bank's pension fund liabilities, regarding the defined benefit pension plans of its
employees and managers, was determined based on an analysis carried out on a set of available information, which
includes, among other elements, the market references for this indicator published by internationally recognized
specialized entities and which are based, as defined by IAS 19, on market yields of a universe of high quality bond
issues (low risk), different maturities, called in Euros and relating to a diverse and representative range of issuers (non-
sovereign). With reference to 31 December 2022, the Group used a discount rate of 4.17%% (31 December 2021: 1.35%
%).
The Actuarial gains are related to the difference between the actuarial assumptions used for the estimation of the
liabilities and the values verified and the change in actuarial assumptions, are analysed as follows:

|  |  | (Thousands of euros)
| Actuarial (gains) / losses
| 2022 | 2021
| Values effectively verified in % | Amount of deviations | Values effectively verified in % | Amount of deviations
Deviation between expected and actual liabilities |  | 58,590 |  | 57,564
Changes on the assumptions: |  |  |  |
Discount rate |  | (1,108,506) |  | (167,475)
Salary and pensions growth rate |  | 279,108 |  | —
Mortality tables |  | 63,571 |  | —
Other changes |  | 72,154 |  | —
Deviation between expected income and income from funds | -5.07% | 259,394 | 1.92% | (25,374)
| — | (375,689) | — | (135,285)

In accordance with IAS 19, the sensitivity analysis to changes in assumptions, is as follows:

|  |  | (Thousands of euros)
| Impact resulting from changes in financial assumptions
| 2022 | 2021
| -0.25% | 0.25% | -0.25% | 0.25%
Discount rate | 87,938 | (82,095) | 135,482 | (127,790)
Pension's increase rate | (98,276) | 102,703 | (143,548) | 151,248
Salary growth rate | (20,620) | 23,675 | (32,795) | 35,922

|  |  | (Thousands of euros)
| Impact resulting from changes in demographic assumptions
| 2022 | 2021
| - 1 year | + 1 year | - 1 year | + 1 year
Changes in mortality table (*) | 83,017 | (83,816) | 128,401 | (127,687)

(*) The impact of 1 year reduction in the mortality table implies an increase in the average life expectancy
Defined contribution plan
According to what is described in accounting policy 1 R3, in the scope of the Defined Contribution Plan provided for the
BCP Pension Fund of the BCP Group for employees who have been admitted until 1 July 2009, in 2022 was accounted for
a cost of Euros 2 million as an estimated contribution given that the Group estimates that the following requirements
will me met, cumulatively: (i) the previous year BCP's ROE equals or exceeds the rate of government bonds of 10 years
plus 5 percentage points, and (ii) distributable profits or reserves exist in the accounts of Banco Comercial Português.
No contributions were made in 2021.
For employees who have been admitted after 1 July 2009, are made monthly contributions equal to 1.5% of the monthly
remuneration received by employees in the current month, either by themselves or by the Group and employees. This
contribution has a mandatory character and is defined in the Collective Labour Agreement of the BCP Group and does
not have a performance criterion. The Group accounted for staff costs in 2022 the amount of Euros 307,000 (2021:
Euros 268,000) related to this contribution.

2022 REPORT & ACCOUNTS |

| 347
51.Related parties
As defined by IAS 24, are considered related parties of the Group, the companies detailed in note 60 - List of subsidiary
and associated companies of Banco Comercial Português Group, the Pension Fund, the members of the Board of
Directors and key management members. The key management members are the first line Directors. Beyond the
members of the Board of Directors and key management members, are also considered related parties, people who are
close to them (family relationships) and entities controlled by them or in whose management they have significant
influence.
As the transactions with subsidiaries are eliminated in consolidation, these are not included in the notes to the Group's
consolidated financial statements.
According to Portuguese law, namely under Article no. 109 of the General Law for Credit Institutions and Financial
Companies and also in accordance with Article no. 33 of Notice 3/2020 of the Bank of Portugal, are considered related
parties as well, the qualified shareholders of Banco Comercial Português, S.A. and the entities controlled by them or
with which they are in a group relationship. Under the scope of the Portuguese Securities Code update, which came
into force at the beginning of 2022, the reference threshold of 2% for qualifying holdings was changed to 5%. With
reference to 2021 financial year, the reported balances refer to qualifying holdings above 2%, in accordance with the
Securities Code in force at the date. The list of the qualified shareholders is detailed in note 41.
A)Balances and transactions with qualified shareholders
The balances reflected in assets of consolidated balance sheet with qualified shareholders, are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Assets |  |
Financial assets at amortised cost |  |
Loans and advances to customers | 97,744 | 148,916
Debt securities | 79,787 | 79,673
Financial assets at fair value through profit or loss |  |
Financial assets held for trading | — | 2,881
Financial assets at fair value through other comprehensive income | — | 136,849
Others | — | 48
| 177,531 | 368,367
Liabilities |  |
Resources from customers | 96,159 | 319,137
Financial liabilities at fair value through profit or loss |  |
Financial liabilities held for trading | 4,287 | —
| 100,446 | 319,137

Loans and advances to customers are net of impairment in the amount of Euros 914,000 (31 December 2021: Euros
3,140,000) and for Debt securities the amount of Euros 257,000 (31 December 2021: Euros 347,000).

| 2022 REPORT & ACCOUNTS

348 |
The transactions with qualified shareholders, reflected in the consolidated income statement items, are as follows:

| (Thousands of euros)
| 2022 | 2021
Income |  |
Interest and similar income | 5,989 | 9,979
Commissions | 752 | 5,358
| 6,741 | 15,337
Costs |  |
Commissions | 82 | 122
| 82 | 122

The balances with qualified shareholders, reflected in the guarantees granted and revocable and irrevocable credit
lines, are as follows:

| (Thousands of euros)
| 2022 | 2021
Guarantees granted | 2,273 | 48,060
Revocable credit lines | 18,171 | 143,225
Irrevocable credit lines | — | 150,000
| 20,444 | 341,285

In 2022, the Group has accounted for provisions for Guarantees granted the amount of Euros 3,000 (31 December 2021:
Euros 86,000), for Revocable credit lines the amount of Euros 229,000 (31 December 2021: Euros 184,000). As at 31
December 2021, were also accounted for provisions for irrevocable credit lines in the amount of Euros 26,000.
B)Balances and transactions with members of the Board of Directors and key management
members
The balances with related parties discriminated in the following table, included on the consolidated balance sheet, are
analysed as follows:

|  |  | (Thousands of euros)
| Loans and advances to customers | Resources from customers
| 2022 | 2021 | 2022 | 2021
Board of Directors |  |  |  |
Non-executive directors | 10 | 2 | 8,180 | 7,272
Executive Committee (*) | 46 | 65 | 2,716 | 1,628
Closely related people | 14 | 230 | 2,629 | 2,210
Controlled entities | — | — | 24 | 45
Key management members |  |  |  |
Key management members | 6,575 | 6,114 | 10,180 | 9,996
Closely related people | 2,475 | 1,146 | 4,497 | 5,224
Controlled entities | 928 | 2 | 2,613 | 2,232
| 10,048 | 7,559 | 30,839 | 28,607

(*) The item Loans to Customers corresponds to mortgage loans granted prior to the respective election and to the
amount used from private credit cards which must be settled on the maturity date.
In accordance with Article 85, no. 9 of RGICSF, no credits were granted during 2022 and 2021.

2022 REPORT & ACCOUNTS |

| 349
In 2022 and 2021, the transactions with related parties discriminated in the following table, included in income items
of the consolidated income statement, are as follows:

|  |  | (Thousands of euros)
| Interest and similar income | Commissions income
| 2022 | 2021 | 2022 | 2021
Board of Directors |  |  |  |
Non-executive directors | — | — | 29 | 46
Executive Committee | — | — | 10 | 9
Closely related people | — | 3 | 9 | 6
Key management members |  |  |  |
Key management members | 41 | 23 | 62 | 62
Closely related people | 22 | 9 | 43 | 38
Controlled entities | 17 | — | 19 | 8
| 80 | 35 | 172 | 169

In 2022 and 2021, the transactions with related parties discriminated in the following table, included in cost items of
the consolidated income statement, are as follows:

|  |  | (Thousands of euros)
| Interest and similar expense | Commissions' expense
| 2022 | 2021 | 2022 | 2021
Board of Directors |  |  |  |
Non-executive directors | 19 | 4 | — | 1
Executive Committee | — | — | 1 | —
Closely related people | 9 | 1 | — | —
Key management members |  |  |  |
Key management members | 6 | 6 | 4 | 4
Closely related people | 2 | 1 | 2 | 1
Controlled entities | — | — | 2 | 2
| 36 | 12 | 9 | 8

The revocable credit lines granted by the Group to the following related parties are as follows:

|  |  |  |  | (Thousands of euros)
| Guarantees granted | Revocable credit lines | Irrevocable credit lines
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021
Board of Directors |  |  |  |  |  |
Non-executive directors | — | — | 113 | 91 | — | —
Executive Committee (*) | — | — | 140 | 175 | — | —
Closely related people | — | — | 43 | 55 | — | —
Key management members |  |  |  |  |  |
Key management members | 5 | — | 825 | 878 | — | —
Closely related people | — | — | 164 | 210 | — | 23
Controlled entities | — | — | 525 | 27 | — | —
| 5 | — | 1,810 | 1,436 | — | 23

(*) Corresponds to the maximum authorized and unused limit of private credit cards and overdraft authorization in a
salary account under the same regime as all the Bank's other employees.

| 2022 REPORT & ACCOUNTS

350 |
The shareholder and bondholder position of members of the Board of Directors, Key management members and people
closely related to the previous categories, as well as the movements occurred during 2022, are as follows:

|  | Number of securities |  |  |  |  |  | Unit price Euros
Shareholders/Bondholders | Security | 2022 | 2021 | Acquisitions |  | Disposals |  | Date
MEMBERS OF BOARD OF DIRECTORS |  |  |  |  |  |  |  |  |
Altina de Fátima Sebastián González Villamarin | BCP Shares | 0 | 0 |  |  |  |  |  |
Ana Paula Alcobia Gray | BCP Shares | 0 | 0 |  |  |  |  |  |
Cidália Maria da Mota Lopes | BCP Shares | 2,184 | 2,184 |  |  |  |  |  |
Fernando da Costa Lima | BCP Shares | 18,986 | 18,986 |  |  |  |  |  |
João Nuno Oliveira Jorge Palma | BCP Shares | 1,364,642 | 426,957 | 1,662,562 | (a) | 724,877 | (b) | 24/6/2022 | 0.1775
Jorge Manuel Baptista Magalhães Correia | BCP Shares | 88,500 | 88,500 |  |  |  |  |  |
Bonds (i) | 1 | 1 |  |  |  |  |  |
Bonds (ii) | 1 | 1 |  |  |  |  |  |
José Miguel Bensliman Schorcht da Silva Pessanha | BCP Shares | 1,177,152 | 333,829 | 1,500,574 | (a) | 657,251 | (b) | 24/6/2022 | 0.1775
José Pedro Rivera Ferreira Malaquias | BCP Shares | 9,808 | 9,808 |  |  |  |  |  |
Júlia Gu (Xiao Xu Gu) | BCP Shares | 0 | 0 |  |  |  |  |  |
Lingjiang Xu | BCP Shares | 0 | 0 |  |  |  |  |  |
Lingzi Yuan (Smilla Yuan) | BCP Shares | 0 | 0 |  |  |  |  |  |
Maria José Henriques Barreto de Matos de Campos | BCP Shares | 1,554,512 | 396,914 | 1,446,998 | (a) | 289,400 | (b) | 24/6/2022 | 0.1775
Miguel de Campos Pereira de Bragança | BCP Shares | 1,725,908 | 763,422 | 1,685,613 | (a) | 723,127 | (b) | 24/6/2022 | 0.1775
Miguel Maya Dias Pinheiro | BCP Shares | 2,018,854 | 800,692 | 2,118,541 | (a) | 900,379 | (b) | 24/6/2022 | 0.1775
Nuno Manuel da Silva Amado | BCP Shares | 1,525,388 | 1,525,388 |  |  |  |  |  |
Bonds (i) | 2 | 2 |  |  |  |  |  |
Bonds (ii) | 2 | 2 |  |  |  |  |  |
Bonds (iii) | 1 | 0 | 1 |  |  |  | 7/11/2022 | 100,000
Rui Manuel da Silva Teixeira | BCP Shares | 1,207,858 | 376,663 | 1,478,995 | (a) | 647,800 | (b) | 24/6/2022 | 0.1775
Valter Rui Dias de Barros | BCP Shares | 0 | 0 |  |  |  |  |  |
KEY MANAGEMENT MEMBERS |  |  |  |  |  |  |  |  |
Albino António Carneiro de Andrade | BCP Shares | 128,684 | 101,557 | 27,127 | (a) |  |  | 24/6/2022 | 0.1775
Alexandre Manuel Casimiro de Almeida | BCP Shares | 111,400 | 55,865 | 55,535 | (a) |  |  | 24/6/2022 | 0.1775
Américo João Pinto Carola | BCP Shares | 104,945 | 61,269 | 77,439 | (a) | 33,763 | (b) | 24/6/2022 | 0.1775
Ana Maria Jordão F. Torres Marques Tavares | BCP Shares | 215,340 | 161,758 | 84,249 | (a) | 30,667 | (b) | 24/6/2022 | 0.1775
Ana Patrícia Moniz Macedo | BCP Shares | 0 | 0 |  |  |  |  |  |
André Cardoso Meneses Navarro | BCP Shares | 148,020 | 106,697 | 55,098 | (a) | 13,775 | (b) | 24/6/2022 | 0.1775
António Augusto Amaral de Medeiros | BCP Shares | 143,063 | 100,077 | 76,485 | (a) | 33,499 | (b) | 24/6/2022 | 0.1775
António Ferreira Pinto Júnior | BCP Shares |  | 33,187 |  |  | 27,266 |  | 1/4/2022 | 0.1492
11,842 |  | 5,921 | (a) |  |  | 24/6/2022 | 0.1775
António José Lindeiro Cordeiro | BCP Shares | 64,134 | 32,631 | 52,770 | (a) | 21,267 | (b) | 24/6/2022 | 0.1775
António Luís Duarte Bandeira | BCP Shares | 285,425 | 236,233 | 87,529 | (a) | 38,337 | (b) | 24/6/2022 | 0.1775
António Ricardo Fery Salgueiro Antunes | BCP Shares | 61,361 | 15,035 | 46,326 | (a) |  |  | 24/6/2022 | 0.1775
António Vítor Martins Monteiro | BCP Shares | 3,872 | 3,872 |  |  |  |  |  |

(i) - Tejo Project - Fixed Rate Reset Perpetual Temporary Write Down Additional Tier 1 Capital Notes
(ii) - BCP Tier 2 Subordinated Callable Notes
(iii) - BCP 1.75% EUR 500M 6.5NC5.5 Social Senior Preferred Notes
(a) - identifies the increment of shares up to 31 December 2022 corresponding to variable compensation of 2021 and deferred from previous years
(b) - identifies the shares used in sell-cover up to 31 December 2022 related to the increment of shares of variable remuneration.

2022 REPORT & ACCOUNTS |

| 351

|  | Number of securities |  |  |  |  |  | Unit price Euros
Shareholders/Bondholders | Security | 2022 | 2021 | Acquisitions |  | Disposals |  | Date
Artur Frederico Silva Luna Pais | BCP Shares | 459,405 | 396,760 | 62,645 | (a) |  |  | 24/6/2022 | 0.1775
Belmira Abreu Cabral | BCP Shares | 96,604 | 57,285 | 62,410 | (a) | 23,091 | (b) | 24/6/2022 | 0.1775
Bernardo Roquette de Aragão de Portugal Collaço | BCP Shares | 54,362 | 25,999 | 49,673 | (a) | 21,310 | (b) | 24/6/2022 | 0.1775
Chi Wai Leung (Timothy) | BCP Shares | 26,582 | 9,852 | 16,730 | (a) |  |  | 24/6/2022 | 0.1775
Constantino Alves Mousinho | BCP Shares |  | 40,664 | 19,591 | (a) |  |  | 24/6/2022 | 0.1775
72,352 |  | 12,097 | (a) |  |  | 25/11/2022 | 0.1525
Fernando Maria Cardoso Rodrigues Bicho | BCP Shares | 237 | 237 |  |  |  |  |  |
Filipe Maria de Sousa Ferreira Abecasis | BCP Shares | 135,398 | 85,467 | 87,446 | (a) | 37,515 | (b) | 24/6/2022 | 0.1775
Francisco António Caspa Monteiro | BCP Shares | 186,219 | 137,027 | 87,529 | (a) | 38,337 | (b) | 24/6/2022 | 0.1775
Gonçalo Nuno Belo de Almeida Pascoal | BCP Shares | 119,771 | 78,390 | 72,471 | (a) | 31,090 | (b) | 24/6/2022 | 0.1775
Hugo Miguel Martins Resende | BCP Shares | 139,589 | 92,696 | 83,143 | (a) | 36,250 | (b) | 24/6/2022 | 0.1775
João Brás Jorge | BCP Shares | 91,709 | 91,709 |  |  |  |  |  |
João Manuel Rodrigues Tomé Cunha Martins | BCP Shares | 0 | 0 |  |  |  |  |  |
João Manuel Taveira Pinto Santos Paiva | BCP Shares | 190,677 | 103,739 | 86,938 | (a) |  |  | 24/6/2022 | 0.1775
Jorge Filipe Nogueira Freire Cortes Martins | BCP Shares |  | 38,003 | 79,632 | (a) | 31,375 | (b) | 24/6/2022 | 0.1775
48,257 |  |  |  | 38,003 |  | 6/7/2022 | 0.1454
Jorge Manuel Machado de Sousa Góis | BCP Shares | 134,204 | 73,203 | 61,001 | (a) |  |  | 24/6/2022 | 0.1775
Jorge Manuel Magalhães Oliveira Pereira | BCP Shares | 25,460 | 0 | 44,355 | (a) | 18,895 | (b) | 24/6/2022 | 0.1775
Jorge Manuel Nobre Carreteiro | BCP Shares | 55,988 | 27,648 | 47,471 | (a) | 19,131 | (b) | 24/6/2022 | 0.1775
Jorge Octávio Neto dos Santos | BCP Shares | 471,191 | 471,191 |  |  |  |  |  |
José Artur Gouveia Coelho Caetano | BCP Shares | 0 | 0 |  |  |  |  |  |
José Carlos Benito Garcia de Oliveira | BCP Shares | 37,941 | 37,941 |  |  |  |  |  |
José Gonçalo Prior Regalado | BCP Shares | 163,020 | 83,836 | 79,184 | (a) |  |  | 24/6/2022 | 0.1775
José Guilherme Potier Raposo Pulido Valente | BCP Shares | 280,081 | 208,437 | 71,644 | (a) |  |  | 24/6/2022 | 0.1775
José Laurindo Reino da Costa | BCP Shares |  | 751,100 |  |  | 401,100 |  | 4/1/2022 | 0.1502
|  |  |  | 150,000 |  | 3/6/2022 | 0.1953
50,000 |  |  |  | 150,000 |  | 3/11/2022 | 0.1531
José Maria Gonçalves Pereira Brandão de Brito | BCP Shares | 55,225 | 23,878 | 50,076 | (a) | 18,729 | (b) | 24/6/2022 | 0.1775
Luis Miguel Manso Correia dos Santos | BCP Shares | 216,790 | 125,615 | 91,175 | (a) |  |  | 24/6/2022 | 0.1775
Maria Constança C. Brandão Amado Fonseca G. Santos | BCP Shares | 800 | 800 |  |  |  |  |  |
Maria de Fátima Coelho Dias | BCP Shares | 0 | 0 |  |  |  |  |  |
Maria de Los Angeles Sanchez Sanchez | BCP Shares |  | 19,191 | 23,029 | (a) | 9,649 | (b) | 24/6/2022 | 0.1775
41,011 |  | 14,113 | (a) | 5,673 | (b) | 25/11/2022 | 0.1525
Maria Helena Soledade Nunes Henriques | BCP Shares | 232,863 | 199,002 | 60,250 | (a) | 26,389 | (b) | 24/6/2022 | 0.1775
Maria Manuela de Araújo Mesquita Reis | BCP Shares | 190,663 | 152,857 | 63,327 | (a) | 25,521 | (b) | 24/6/2022 | 0.1775
Maria Rita Sítima Fonseca Lourenço | BCP Shares | 173,448 | 112,778 | 60,670 | (a) |  |  | 24/6/2022 | 0.1775
Mário António Pinho Gaspar Neves | BCP Shares | 108,172 | 73,963 | 60,762 | (a) | 26,553 | (b) | 24/6/2022 | 0.1775
Mário Madeira Robalo Fernandes | BCP Shares | 156,951 | 79,512 | 77,439 | (a) |  |  | 24/6/2022 | 0.1775
Nelson Luís Vieira Teixeira | BCP Shares | 108,936 | 59,343 | 86,855 | (a) | 37,262 | (b) | 24/6/2022 | 0.1775
Nuno Alexandre Ferreira Pereira Alves | BCP Shares | 183,959 | 101,156 | 82,803 | (a) |  |  | 24/6/2022 | 0.1775
Nuno Miguel Nobre Botelho | BCP Shares |  | 33,366 | 72,259 | (a) |  |  | 24/6/2022 | 0.1775
85,625 |  |  |  | 20,000 |  | 29/8/2022 | 0.1400
Pedro José Mora de Paiva Beija | BCP Shares |  | 107,673 |  |  | 28,000 |  | 18/5/2022 | 0.1720
|  |  |  | 29,000 |  | 20/5/2022 | 0.1700
138,202 |  | 87,529 | (a) |  |  | 24/062022 | 0.1775

(a) - identifies the increment of shares up to 31 December 2022 corresponding to variable compensation of 2021 and deferred from previous years.
(b) - identifies the shares used in sell-cover up to 31 December 2022 related to the increment of shares of variable remuneration.

| 2022 REPORT & ACCOUNTS

352 |

|  | Number of securities |  |  |  |  |  | Unit price Euros
Shareholders/Bondholders | Security | 2022 | 2021 | Acquisitions |  | Disposals |  | Date
Pedro Manuel Francisco da Silva Dias | BCP Shares | 111,149 | 50,473 | 60,676 | (a) |  |  | 24/6/2022 | 0.1775
Pedro Manuel Macedo Vilas Boas | BCP Shares | 146,870 | 79,512 | 67,358 | (a) |  |  | 24/6/2022 | 0.1775
Pedro Manuel Rendas Duarte Turras | BCP Shares | 105,371 | 61,176 | 73,780 | (a) | 29,585 | (b) | 24/6/2022 | 0.1775
Ricardo Potes Valadares | BCP Shares | 68,014 | 33,093 | 60,207 | (a) | 25,286 | (b) | 24/6/2022 | 0.1775
Rosa Maria Ferreira Vaz Santa Bárbara | BCP Shares | 117,023 | 68,163 | 86,938 | (a) | 38,078 | (b) | 24/6/2022 | 0.1775
Bonds (i) | 1 |  |  |  |  |  | 7/7/2022 | 200,000
Rui Emanuel Agapito Silva | BCP Shares | 109,252 | 60,219 | 86,938 | (a) | 37,905 | (b) | 24/6/2022 | 0.1775
Rui Fernando da Silva Teixeira | BCP Shares | 186,154 | 145,098 | 73,053 | (a) | 31,997 | (b) | 24/6/2022 | 0.1775
Rui Manuel Pereira Pedro | BCP Shares | 339,819 | 252,786 | 87,033 | (a) |  |  | 24/6/2022 | 0.1775
Rui Miguel Alves Costa | BCP Shares | 279,133 | 217,920 | 61,213 | (a) |  |  | 24/6/2022 | 0.1775
Rui Nelson Moreira de Carvalho Maximino | BCP Shares | 110,273 | 60,954 | 87,446 | (a) | 38,127 | (b) | 24/6/2022 | 0.1775
Rui Pedro da Conceição Coimbra Fernandes | BCP Shares | 143,793 | 70,740 | 73,053 | (a) |  |  | 24/6/2022 | 0.1775
Tiago Alexandre Machado Ferreira Mateus | BCP Shares | 2,128 | 2,128 |  |  |  |  |  |
Vânia Alexandra Machado Marques Correia | BCP Shares | 115,226 | 66,426 | 61,001 | (a) | 12,201 | (b) | 24/6/2022 | 0.1775
PEOPLE CLOSELY RELATED TO THE PREVIOUS CATEGORIES |  |  |  |  |  |  |  |  |
of: Cidália Maria da Mota Lopes |  |  |  |  |  |  |  |  |
Alexandre Miguel Martins Ventura | BCP Shares | 2,184 | 2,184 |  |  |  |  |  |
of: José Miguel Bensliman Schorcht da Silva Pessanha |  |  |  |  |  |  |  |  |
Inheritance from Anne Marie Bensliman Silva Pessanha | BCP Shares | 139 | 139 |  |  |  |  |  |
of: Maria José Henriques Barreto de Matos de Campos |  |  |  |  |  |  |  |  |
Armando Lopes de Campos | BCP Shares | 35 | 35 |  |  |  |  |  |
Ivone Monteiro Lopes de Campos | BCP Shares | 25 | 25 |  |  |  |  |  |
Ricardo Gil Monteiro Lopes de Campos | BCP Shares | (c) | (c) |  |  |  |  |  |
of: Rui Manuel da Silva Teixeira |  |  |  |  |  |  |  |  |
Maria Helena Espassandim Catão | BCP Shares | 576 | 576 |  |  |  |  |  |
of: Américo João Pinto Carola |  |  |  |  |  |  |  |  |
Ana Isabel Salgueiro Antunes | BCP Shares | 29 | 29 |  |  |  |  |  |
of: Ana Maria Jordão F. Torres Marques Tavares |  |  |  |  |  |  |  |  |
Álvaro Manuel Coreia Marques Tavares | BCP Shares | 25,118 | 25,118 |  |  |  |  |  |
Francisco Jordão Torres Marques Tavares | BCP Shares | 1,016 | 1,016 |  |  |  |  |  |
Maria Avelina V. C. L. J. Teixeira Diniz | BCP Shares | 16,770 | 16,770 |  |  |  |  |  |
of: António Luís Duarte Bandeira |  |  |  |  |  |  |  |  |
Ana Margarida Rebelo A. M. Soares Bandeira | BCP Shares | 2,976 | 2,976 |  |  |  |  |  |
António da Silva Bandeira | BCP Shares | 20,000 | 20,000 |  |  |  |  |  |
of: António Vítor Martins Monteiro |  |  |  |  |  |  |  |  |
Isabel Maria Vaz Leite Pinto Martins Monteiro | BCP Shares | 3,104 | 3,104 |  |  |  |  |  |
of: Francisco António Caspa Monteiro |  |  |  |  |  |  |  |  |
Ricardo Miranda Monteiro | BCP Shares | 1,639 | 1,639 |  |  |  |  |  |
Rita Miranda Monteiro | BCP Shares | 1,639 | 1,639 |  |  |  |  |  |
of: José Gonçalo Prior Regalado |  |  |  |  |  |  |  |  |
Américo Simões Regalado | BCP Shares | 880 | 880 |  |  |  |  |  |
of: Maria Helena Soledade Nunes Henriques |  |  |  |  |  |  |  |  |
João Paulo Rodrigues Taborda Gonçalves | BCP Shares | 130 | 130 |  |  |  |  |  |
of: Maria Manuela de Araújo Mesquita Reis |  |  |  |  |  |  |  |  |
Luís Filipe da Silva Reis | BCP Shares | 280,000 | 280,000 |  |  |  |  |  |
of: Pedro Manuel Francisco da Silva Dias |  |  |  |  |  |  |  |  |
Filomena Maria Brito Francisco Dias | BCP Shares | 4,290 | 4,290 |  |  |  |  |  |

(a) - identifies the increment of shares up to 31 December 2022 corresponding to variable compensation of 2021 and deferred from previous years.
(b) - identifies the shares used in sell-cover up to 31 December 2022 related to the increment of shares of variable remuneration.
(c) - solidary ownership in both securities accounts, and Dr. Ricardo Campos is the first holder and Eng.ª Maria José Campos is the 2nd holder of the
securities account.

2022 REPORT & ACCOUNTS |

| 353
C)Balances and transactions with associated companies
The balances with associated companies included in the consolidated balance sheet items, except for the item
investments in associated companies, are as follows:

| (Thousands of euros)
| 2022 | 2021
Assets |  |
Loans and advances to credit institutions repayable on demand | 8,834 | 2,130
Financial assets at amortised cost |  |
Loans and advances to credit institutions | 206,078 | 18,290
Loans and advances to customers | 59,487 | 63,681
Financial assets at fair value through profit or loss |  |
Financial assets held for trading | — | 35
Other assets | 11,497 | 12,542
| 285,896 | 96,678
Liabilities |  |
Financial liabilities at amortised cost |  |
Resources from credit institutions | 62,845 | 46,158
Resources from customers | 211,193 | 346,254
Non subordinated debt securities issued | 2,002 | 21,019
Financial liabilities held for trading | 3,894 | 96,536
Other liabilities | 8 | 51
| 279,942 | 510,018

As at 31 December 2021, the associated company Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. held
142,601,002 BCP shares in the amount of Euros 20,078,000, which were sold in the last quarter of 2022.
In 2022 and 2021, the transactions with associated companies included in the consolidated income statement items are
as follows:

| (Thousands of euros)
| 2022 | 2021
Income |  |
Interest and similar income | 4,198 | 3,409
Commissions | 60,230 | 58,859
Profits from financial operations | 1,020 | 718
Other operating income | 1,957 | 1,020
| 67,405 | 64,006
Costs |  |
Interest and similar expenses | 1,104 | 5,294
Commissions | 113 | 38
Other administrative costs | 4,136 | 139
Losses from financial operations | — | 1,234
Other operating losses | 51 | 625
| 5,404 | 7,330

| 2022 REPORT & ACCOUNTS

354 |
The guarantees granted and revocable and irrevocable credit lines by the Group over associated companies are as
follows:

| (Thousands of euros)
| 2022 | 2021
Guarantees granted | 7,539 | 7,453
Revocable credit lines | 9,527 | 335,367
Irrevocable credit lines | — | 600
| 17,066 | 343,420

Under the scope of the Group's insurance mediation activities, the remuneration from services provided is analysed as
follows:

| (Thousands of euros)
| 2022 | 2021
Life insurance |  |
Saving products | 27,966 | 32,101
Mortgage and consumer loans | 20,699 | 19,333
Others | — | 30
| 48,665 | 51,464
Non-Life insurance |  |
Accidents and health | 21,612 | 20,144
Motor | 3,956 | 4,078
Multi-Risk Housing | 7,753 | 7,392
Others | 1,660 | 1,549
| 34,981 | 33,163
| 83,646 | 84,627

Remuneration from insurance intermediation services was received through bank transfers and resulted from insurance
intermediation with Ocidental - Companhia Portuguesa de Seguros de Vida, S.A. and Ageas Portugal - Companhia de
Seguros, S.A. (Millenniumbcp Ageas Group). The Group does not collect insurance premiums on behalf of Insurance
Companies nor performs any movement of funds related to insurance contracts. Thus, there is no other asset, liability,
income or expense to be reported related to the activity of insurance mediation exercised by the Group, other than
those already disclosed.
The receivable balances from insurance intermediation activities, by nature, are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Funds receivable for payment of life insurance commissions | 11,467 | 12,525
Funds receivable for payment of non-life insurance commissions | 8,835 | 8,482
| 20,302 | 21,007

The commissions received result from insurance mediation contracts and investment contracts, under the terms
established in the contracts in force. The mediation commissions are calculated according to the nature of the
contracts subject to mediation, as follows:
- insurance contracts – use of fixed rates on gross premiums issued;
- investment contracts – use of fixed rates on the responsibilities assumed by the insurance company under the
commercialisation of these products.

2022 REPORT & ACCOUNTS |

| 355
D)Transactions with the Pension Fund
The balances with the Pension Fund included in items of the consolidated balance sheet are as follows:

| (Thousands of euros)
| 2022 | 2021
Assets |  |
Financial assets held for trading | 209 | 711
| 209 | 711
Liabilities |  |
Resources from customers | 145,303 | 173,377
Non subordinated debt securities issued | 13,199 | 29,144
Financial liabilities held for trading | 3,475 | —
| 161,977 | 202,521

In 2022 and 2021, there were no transactions related to other financial instruments between the Group and the Pension
Fund.
In 2022 and 2021, income and expenses with the Pension Fund included in the items of the consolidated income
statement are as follows:

| (Thousands of euros)
| 2022 | 2021
Income |  |
Commissions | 2,167 | 2,268
Expenses |  |
Interest expense and similar charges | — | 1,114
Other administrative costs | 14,227 | 14,231
| 14,227 | 15,345

The balance Other administrative costs corresponds to rents incurred under the scope of the Pension Fund's properties
in which the tenant is the Group.
As at 31 December 2022 and 2021, the guarantees granted by the Group to the Pension Fund amount to Euros 5,000.

| 2022 REPORT & ACCOUNTS

356 |
52.Consolidated Balance sheet and Income statement by geographic and
operational segments
The segments presented are in accordance with IFRS 8. In accordance with the Group's management model, the
segments presented correspond to the segments used for management purposes by the Executive Committee. The
Group offers a wide range of banking activities and financial services in Portugal and abroad, with a special focus on
Commercial Banking, Companies Banking and Private Banking.
Segments description
A.Geographical Segments
The Group operates in the Portuguese market, and also in a few affinity markets with recognised growth potential.
Considering this, the geographical segments are structured in Portugal and Foreign Business (Poland, Mozambique and
Other). Portugal segment reflects, essentially, the activities carried out by Banco Comercial Português in Portugal and
ActivoBank.
Portugal activity includes the following segments: i) Retail Banking; ii) Companies, Corporate & Investment Banking; iii)
Private Banking and iv) Other.
Retail Banking includes the following business areas:
- Retail network, which ensures the monitoring of individual customers, entrepreneurs, merchants and small and
medium enterprises with a turnover less than Euros 2.5 million. The Retail network strategic approach is to target
“Mass Market” customers, who appreciate a value proposal based on innovation and speed, as well as Prestige and
Small Business customers, whose specific characteristics, financial assets or income imply a value proposal based on
innovation and personalisation, requiring a dedicated Account Manager;
- Retail Recovery Division that accompanies and manages the responsibilities of customers or economic groups in
effective default, as well as customers with bankruptcy requirement or other similar mechanisms, looking through the
conclusion of agreements or payment restructuring processes that minimizes the economic loss to the Bank; and
- ActivoBank, a bank focused on clients who are young, intensive users of new communication technologies and who
prefer a banking relationship based on simplicity, offering modern products and services.
Companies, Corporate and Investment Banking segment includes:
- Companies and Corporate network, which monitors clients included in the corporate segment, economic groups and
institutional entities, with a turnover higher than Euros 2.5 million, offering a wide range of traditional banking
products complemented by specialised financing;
- Large Corporate network that assures the relationship and the monitoring of a set of Groups / Clients, which in
addition to Portugal, develop their activity in several geographies (Poland, Angola, Mozambique and East), providing a
complete range of value-added products and services;
- Specialised Monitoring Division which carries out the monitorisation of business groups that have high and complex
credit exposures or that show relevant signs of impairment, in order to defend the value and managing credit risk, in
a sustainable medium and long term perspective;

2022 REPORT & ACCOUNTS |

| 357
- Investment Banking unit, that ensures the offer of products and specific services, in particular financial advice,
including corporate finance services, capital market transactions and analysis and financing structuring in the medium
to long term;
- Trade Finance Department (from Marketing Division for Corporate, Business and Institutional since the end of 2021),
which coordinates the business with banks and financial institutions, boosting international business with the
commercial networks of the Bank and institutional custody services for securities;
- Specialised Recovery Division which ensures efficient tracking of customers with predictable or effective high risk of
credit, from Companies, Corporate, Large Corporate and retail networks (exposure exceeding Euros 1 million);
- Interfundos with the activity of management of real estate investment funds.
The Private Banking segment, for the purposes of geographical segments, comprises:
- Private Banking Division in Portugal, which ensures the monitoring of clients with high net worth, based on a
commitment to excellence and a personalized relationship with clients;
- Wealth Management Division, which provides advisory services and portfolio management for clients in the Private
Banking network and the affluent segment.
For the purposes of business segments also includes Banque Privée BCP in Switzerland and Millennium bcp Bank & Trust
in Cayman Islands (entity liquidated in 2022) that are considered Foreign Business on geographical segmentation. It
should be noted that the result generated by the subsidiary in Switzerland and the capital gain generated by
discontinuing this operation, as well as its adjustments occurred in 2022, are recorded in a single line as results of
discontinued or discontinuing operations.
All other businesses not previously discriminated are allocated to the Other segment (Portugal) and include centralized
management of financial investments, corporate activities and operations not integrated in the remaining business
segments and other amounts not allocated to segments.
Foreign Business includes the following segments:
- Poland, where the Group is represented by Bank Millennium, a universal bank offering a wide range of financial
products and services to individuals and companies nationwide;
- Mozambique, where the Group is represented by BIM – Banco Internacional de Moçambique, a universal bank targeting
companies and individual customers; and
- Other, which includes the contribution of the associate in Angola and the contribution of the discontinued operations
in Switzerland and Cayman Islands.

| 2022 REPORT & ACCOUNTS

358 |
B.Business Segments
For the purposes of business segments reporting, Foreign Business segment comprises the Group’s operations developed
in other countries already mentioned excluding the activity of Banque Privée BCP in Switzerland and Millennium bcp
Bank & Trust in the Cayman Islands which, in this context, are considered in Private Banking segment.
Business segments activity
The figures reported for each segment resulted from aggregating the subsidiaries and business units integrated in each
segment. For the business units in Portugal, the aggregation process reflects the impact from capital allocation and
balancing process in the balance sheet and income statement, based on average figures. The balance sheet headings
for each business unit and Portuguese subsidiaries were re-calculated, considering the replacement of the equity book
values by the amounts assigned through the allocation process, based on the regulatory solvency criteria.
Considering that the process of capital allocation complies with the regulatory criteria of solvency in force, as at 31
December 2022 and 31 December 2021 the risk weighted assets, and consequently the capital allocated to the business
segments, are determined in accordance with the Basel III framework, pursuant to the CRD IV/CRR. The capital
allocated to each segment resulted from the application of a target capital ratio to the risks managed by each segment,
reflecting the application of the Basel III methodology previously referred. Each operation is balanced through internal
transfers of funds, with impact on the net interest income and income taxes of each segment, hence with no impact on
consolidated accounts.
Commissions and other net income, as well as operating costs calculated for each business area, are based on the
amounts accounted for directly in the respective cost centres, on the one hand, and the amounts resulting from
internal processes for allocating revenues and costs, for another. In this case, the allocation is based on the application
of pre-defined criteria related to the level of activity of each business area.
The following information has been prepared based on the individual and consolidated financial statements of the
Group prepared in accordance with international financial reporting standards (IFRS), as adopted by the European
Union (EU), at the reference date and with the Organization of the Group's business areas in force on 31 December
2022. Information relating to prior periods is restated whenever it occurs changes in the internal organization of the
entity susceptible to change the composition of the reportable segments (business and geographical) or relevant
changes in the dynamics of allocation of indirect revenues and costs, as described in the previous paragraph, ensuring
the comparability of the information provided in the reported periods.
Following the sale of the entire share capital of Banque Privée BCP (Suisse) SA (“Banque Privée”) to the Union Bancaire
Privée, UBP SA, the contribution of this subsidiary to the "Private Banking" segment (geographical segments) and "Other"
from "Foreign business" segment (business segments) is reflected as income from discontinued operations. Banque
Privée BCP (Suisse) S.A. ceased to be part of the BCP Group on 2 November 2021, the date on which the sale of this
subsidiary was completed. In this context, the capital gain arising from the sale of the operation and its adjustments
occurred in 2022 were also recorded as income from discontinued operations. It should also be noted that on 29
December 2021, BIM – Banco Internacional de Moçambique, S.A. also formalized the sale to Fidelidade of shares
representing 70% of the share capital and voting rights of Seguradora Internacional de Moçambique, S.A., with BIM
maintaining approximately 22% of its share capital. The contribution of this subsidiary to the net income of the Foreign
Business segment is also presented as income of discontinued or discontinued operations as at December 2021, as
required by IFRS 5. The presentation of assets and liabilities of Banque Privée BCP (Suisse) S.A. and Seguradora
Internacional de Moçambique, S.A. referring to previous periods remained unchanged when compared to the criteria
considered in the preparation of the consolidated financial statements previously disclosed.
The information in the financial statements of reportable segments is reconciled, at the level of the total revenue of
those same segments, with the revenue from the demonstration of the consolidated financial position of the reportable
entity for each date on which is lodged a statement of financial position.

2022 REPORT & ACCOUNTS |

| 359
As at 31 December 2022, the net contribution of the major business segments, for the income statement, is analysed as
follows:

| (Thousands of euros)
| 2022
| Commercial banking | Companies, Corporate and Investment banking in Portugal |
| Retail in Portugal | Foreign business (1) | Total | Private banking | Other | Consolidated
INCOME STATEMENT |  |  |  |  |  |  |
Interest and similar income | 554,723 | 1,658,474 | 2,213,197 | 296,748 | 12,665 | 214,625 | 2,737,235
Interest expense and similar charges | (8,160) | (460,653) | (468,813) | (33,597) | (3,135) | (81,918) | (587,463)
Net interest income | 546,563 | 1,197,821 | 1,744,384 | 263,151 | 9,530 | 132,707 | 2,149,772
Commissions and other income | 481,546 | 321,666 | 803,212 | 198,406 | 43,261 | 4,768 | 1,049,647
Commissions and other costs | (55,517) | (219,667) | (275,184) | (30,057) | (2,147) | (153,377) | (460,765)
Net commissions and other income (2) | 426,029 | 101,999 | 528,028 | 168,349 | 41,114 | (148,609) | 588,882
Net gains arising from trading activity (3) | 20,220 | (19,299) | 921 | 387 | 2,106 | 46,546 | 49,960
Share of profit of associates under the equity method | — | 925 | 925 | — | — | 67,797 | 68,722
Gains/(losses) arising from the sale of subsidiaries and other assets | — | 3,501 | 3,501 | 7 | (1) | 6,660 | 10,167
Net operating revenue | 992,812 | 1,284,947 | 2,277,759 | 431,894 | 52,749 | 105,101 | 2,867,503
Operating expenses | 460,918 | 470,346 | 931,264 | 102,948 | 22,324 | 16,482 | 1,073,018
Results on modification (4) | — | (309,865) | (309,865) | — | — | — | (309,865)
Impairment for credit and financial assets (5) | (65,993) | (82,395) | (148,388) | (181,937) | 594 | 33,602 | (296,129)
Other impairments and provisions (6) | (158) | (550,085) | (550,243) | — | — | (209,790) | (760,033)
Net income before income tax | 465,743 | (127,744) | 337,999 | 147,009 | 31,019 | (87,569) | 428,458
Income tax | (144,633) | (96,742) | (241,375) | (45,814) | (9,690) | (7,441) | (304,320)
Net income after income tax |  |  |  |  |  |  |
from continuing operations | 321,110 | (224,486) | 96,624 | 101,195 | 21,329 | (95,010) | 124,138
Income arising from discontinued operations | — | 3,772 | 3,772 | — | 1,765 | — | 5,537
Net income for the year | 321,110 | (220,714) | 100,396 | 101,195 | 23,094 | (95,010) | 129,675
Non-controlling interests | — | 72,802 | 72,802 | — | — | 5,020 | 77,822
Net income for the year attributable to Bank's Shareholders | 321,110 | (147,912) | 173,198 | 101,195 | 23,094 | (89,990) | 207,497

1) Includes the contribution associated with the investments held in Angola, in Banco Millennium Atlântico.
2) Includes net fees and commissions income, other operating income/(loss), net gains from insurance activity and dividends from
equity instruments.
3) Includes results from financial operations at fair value through profit or loss, results from foreign exchange, results from hedge
accounting operations, results from derecognition of financial assets and financial liabilities measured at amortised cost and results
from derecognition of financial assets measured at fair value through other comprehensive income.
4) Results mainly from the amount associated to potential costs arising from the moratorium program in Poland (credit holidays),
reclassified from other impairments and provisions. It's also included the results of contractual amendments, namely, costs arising
from negotiations with customers holding mortgage loans in foreign currency, hitherto accounted for in other impairments and
provisions (the amounts referring to 2021, given their immateriality in this context, were not restated).
5) Includes impairment of financial assets at amortised cost, for loans and advances of credit institutions, for loans to customers (net
of recoveries - principal and accrual) and for debt instruments related to credit operations. It also includes impairment of financial
assets at amortised cost not associated with credit operations.
6) Includes impairment of non-current assets held for sale, investments in associated companies, goodwill, other assets and provisions,
highlighting the provisions for legal proceedings related to mortgage loans granted in Swiss francs, booked by the Polish subsidiary.

| 2022 REPORT & ACCOUNTS

360 |
As at 31 December 2022, the net contribution of the major operational Segments, for the balance sheet, is analysed as
follows:

| (Thousands of euros)
| 2022
| Commercial banking | Companies, Corporate and Investment banking in Portugal |
| Retail in Portugal | Foreign business | Total | Private banking | Other | Consolidated
BALANCE SHEET |  |  |  |  |  |  |
Cash and Loans and advances to credit institutions | 14,454,223 | 3,208,230 | 17,662,453 | 1,479,714 | 2,610,460 | (14,553,732) | 7,198,895
Loans and advances to customers (1) | 25,609,019 | 16,983,242 | 42,592,261 | 11,885,264 | 344,077 | 1,376,082 | 56,197,684
Financial assets (2) | 2,100,135 | 5,458,513 | 7,558,648 | — | — | 12,795,575 | 20,354,223
Other assets | 92,077 | 942,640 | 1,034,717 | 13,794 | 2,823 | 5,058,405 | 6,109,739
Total Assets | 42,255,454 | 26,592,625 | 68,848,079 | 13,378,772 | 2,957,360 | 4,676,330 | 89,860,541
Resources from credit institutions (3) | 458,034 | 158,808 | 616,842 | 1,799,496 | — | (947,978) | 1,468,360
Resources from customers (4) | 39,318,562 | 23,173,054 | 62,491,616 | 10,577,717 | 2,734,372 | 103,109 | 75,906,814
Debt securities issued (5) | 1,217,830 | 52,066 | 1,269,896 | 1,953 | 133,094 | 1,418,150 | 2,823,093
Other financial liabilities (6) | — | 535,648 | 535,648 | — | — | 1,216,914 | 1,752,562
Other liabilities (7) | 51,224 | 907,471 | 958,695 | 69,045 | 1,058 | 960,349 | 1,989,147
Total Liabilities | 41,045,650 | 24,827,047 | 65,872,697 | 12,448,211 | 2,868,524 | 2,750,544 | 83,939,976
Total Equity | 1,209,804 | 1,765,578 | 2,975,382 | 930,561 | 88,836 | 1,925,786 | 5,920,565
Total Liabilities and Equity | 42,255,454 | 26,592,625 | 68,848,079 | 13,378,772 | 2,957,360 | 4,676,330 | 89,860,541
Number of employees | 3,814 | 9,491 | 13,305 | 522 | 137 | 1,779 | 15,743

1) Includes loans to customers at amortised cost net of impairment, debt instruments at amortised cost associated to credit operations
net of impairment and balance sheet amount of loans to customers at fair value through profit or loss.
2) Includes debt instruments at amortised cost not associated with credit operations (net of impairment), financial assets at fair value
through profit or loss (excluding the ones related to loans to customers), financial assets at fair value through other comprehensive
income, assets with repurchase agreement and hedging derivatives.
3) Includes resources and other financing from central banks and resources from other credit institutions.
4) Corresponds to deposits and other resources from customers (including resources from customers at amortised cost and customer
deposits at fair value through profit or loss).
5) Includes non-subordinated debt securities at amortized cost and financial liabilities at fair value through profit or loss (debt
securities and certificates).
6) Includes financial liabilities held for trading, subordinated debt and hedging derivatives.
7) Includes provisions, current and deferred tax liabilities and other liabilities.

2022 REPORT & ACCOUNTS |

| 361
As at 31 December 2021, the net contribution of the major business segments, for the income statement, is analysed as
follows:

| (Thousands of euros)
| 2021
| Commercial banking | Companies, Corporate and Investment banking in Portugal | Private banking | Other | Consolidated
| Retail in Portugal | Foreign business (1) | Total
INCOME STATEMENT |  |  |  |  |  |  |
Interest and similar income | 452,648 | 845,017 | 1,297,665 | 265,752 | 8,615 | 137,092 | 1,709,124
Interest expense and similar charges | (4,683) | (90,848) | (95,531) | (6,317) | (1,117) | (17,558) | (120,523)
Net interest income | 447,965 | 754,169 | 1,202,134 | 259,435 | 7,498 | 119,534 | 1,588,601
Commissions and other income | 462,357 | 326,399 | 788,756 | 165,373 | 36,517 | (4,042) | 986,604
Commissions and other costs | (52,274) | (171,744) | (224,018) | (20,248) | (3,188) | (139,394) | (386,848)
Net commissions and other income (2) | 410,083 | 154,655 | 564,738 | 145,125 | 33,329 | (143,436) | 599,756
Net gains arising from trading activity (3) | 18,449 | 10,968 | 29,417 | 286 | 1,391 | 55,444 | 86,538
Share of profit of associates under the equity method | — | (1,380) | (1,380) | — | — | 58,317 | 56,937
Gains/(losses) arising from the sale of subsidiaries and other assets | — | 402 | 402 | 4 | — | 2,164 | 2,570
Net operating revenue | 876,497 | 918,814 | 1,795,311 | 404,850 | 42,218 | 92,023 | 2,334,402
Operating expenses | 469,851 | 421,815 | 891,666 | 111,207 | 22,047 | 90,678 | 1,115,598
Impairment for credit and financial assets (4) | (75,370) | (77,259) | (152,629) | (150,831) | 3,005 | (56,120) | (356,575)
Other impairments and provisions (5) | (69) | (545,123) | (545,192) | — | — | (159,300) | (704,492)
Net income before income tax | 331,207 | (125,383) | 205,824 | 142,812 | 23,176 | (214,075) | 157,737
Income tax | (103,402) | (94,583) | (197,985) | (44,722) | (6,960) | 46,041 | (203,626)
Net income after income tax |  |  |  |  |  |  |
from continuing operations | 227,805 | (219,966) | 7,839 | 98,090 | 16,216 | (168,034) | (45,889)
Income arising from discontinued operations | — | 18,587 | 18,587 | — | 52,294 | — | 70,881
Net income for the year | 227,805 | (201,379) | 26,426 | 98,090 | 68,510 | (168,034) | 24,992
Non-controlling interests (6) | — | 113,291 | 113,291 | — | — | (201) | 113,090
Net income for the year attributable to Bank's Shareholders | 227,805 | (88,088) | 139,717 | 98,090 | 68,510 | (168,235) | 138,082

1) Includes the contribution associated with the investments held in Angola, in Banco Millennium Atlântico.
2) Includes net fees and commissions income, other operating income/(loss), net gains from insurance activity and dividends from
equity instruments.
3) Includes results from financial operations at fair value through profit or loss, results from foreign exchange, results from hedge
accounting operations, results from derecognition of financial assets and financial liabilities measured at amortised cost and results
from derecognition of financial assets measured at fair value through other comprehensive income.
4) Includes impairment of financial assets at amortised cost, for loans and advances of credit institutions, for loans to customers (net
of recoveries - principal and accrual) and for debt instruments related to credit operations. It also includes impairment of financial
assets at amortised cost not associated with credit operations.
5) Includes impairment of non-current assets held for sale, investments in associated companies, goodwill, other assets and provisions,
highlighting the provisions for legal proceedings related to mortgage loans granted in Swiss francs, booked by the Polish subsidiary.
6) Includes the non-controlling interests of BIM Group related to Seguradora Internacional de Moçambique, S.A., entity classified as a
discontinued operation

| 2022 REPORT & ACCOUNTS

362 |
As at 31 December 2021, the net contribution of the major operational Segments, for the balance sheet, is analysed as
follows:

| (Thousands of euros)
| 2021
| Commercial banking | Companies, Corporate and Investment banking in Portugal |
| Retail in Portugal | Foreign business | Total | Private banking | Other | Consolidated
BALANCE SHEET |  |  |  |  |  |  |
Cash and Loans and advances to credit institutions | 12,164,325 | 1,563,577 | 13,727,902 | 1,589,469 | 2,779,056 | (9,485,129) | 8,611,298
Loans and advances to customers (1) | 25,010,925 | 17,780,147 | 42,791,072 | 12,077,141 | 344,222 | 1,147,494 | 56,359,929
Financial assets (2) | 1,222,529 | 5,089,223 | 6,311,752 | — | 5,022 | 15,423,364 | 21,740,138
Other assets | 69,403 | 928,378 | 997,781 | 7,933 | 1,741 | 5,185,992 | 6,193,447
Total Assets | 38,467,182 | 25,361,325 | 63,828,507 | 13,674,543 | 3,130,041 | 12,271,721 | 92,904,812
Resources from credit institutions (3) | 362,803 | 124,346 | 487,149 | 3,107,835 | — | 5,301,090 | 8,896,074
Resources from customers (4) | 35,416,593 | 21,847,825 | 57,264,418 | 9,287,187 | 2,555,177 | 453,445 | 69,560,227
Debt securities issued (5) | 1,396,658 | 8,632 | 1,405,290 | 1,418 | 165,410 | 2,198,023 | 3,770,141
Other financial liabilities (6) | — | 501,480 | 501,480 | — | — | 1,501,747 | 2,003,227
Other liabilities (7) | 46,338 | 693,806 | 740,144 | 61,480 | 1,041 | 810,421 | 1,613,086
Total Liabilities | 37,222,392 | 23,176,089 | 60,398,481 | 12,457,920 | 2,721,628 | 10,264,726 | 85,842,755
Total Equity | 1,244,790 | 2,185,236 | 3,430,026 | 1,216,623 | 408,413 | 2,006,995 | 7,062,057
Total Liabilities and Equity | 38,467,182 | 25,361,325 | 63,828,507 | 13,674,543 | 3,130,041 | 12,271,721 | 92,904,812
Number of employees | 3,897 | 9,575 | 13,472 | 541 | 144 | 1,711 | 15,868

1) Includes loans to customers at amortised cost net of impairment, debt instruments at amortised cost associated to credit operations
net of impairment and balance sheet amount of loans to customers at fair value through profit or loss.
2) Includes debt instruments at amortised cost not associated with credit operations (net of impairment), financial assets at fair value
through profit or loss (excluding the ones related to loans to customers), financial assets at fair value through other comprehensive
income, assets with repurchase agreement and hedging derivatives.
3) Includes resources and other financing from central banks and resources from other credit institutions.
4) Corresponds to deposits and other resources from customers (including resources from customers at amortised cost and customer
deposits at fair value through profit or loss).
5) Includes non-subordinated debt securities at amortized cost and financial liabilities at fair value through profit or loss (debt
securities and certificates).
6) Includes financial liabilities held for trading, subordinated debt and hedging derivatives.
7) Includes provisions, current and deferred tax liabilities and other liabilities.

2022 REPORT & ACCOUNTS |

| 363
As at 31 December 2022, the net contribution of the major geographic segments, for the income statement, is analysed
as follows:

| (Thousands of euros)
| 2022
| Portugal |  |  |  |
| Retail banking | Companies, Corporate and Investment banking | Private banking | Other | Total | Poland | Mozambique | Other (1) | Consolidated
INCOME STATEMENT |  |  |  |  |  |  |  |  |
Interest and similar income | 554,723 | 296,748 | 11,693 | 214,625 | 1,077,789 | 1,363,784 | 294,690 | 972 | 2,737,235
Interest expense and similar charges | (8,160) | (33,597) | (3,135) | (81,918) | (126,810) | (368,219) | (92,434) | — | (587,463)
Net interest income | 546,563 | 263,151 | 8,558 | 132,707 | 950,979 | 995,565 | 202,256 | 972 | 2,149,772
Commissions and other income | 481,546 | 198,406 | 43,229 | 4,768 | 727,949 | 271,358 | 50,308 | 32 | 1,049,647
Commissions and other costs | (55,517) | (30,057) | (2,107) | (153,377) | (241,058) | (209,600) | (10,067) | (40) | (460,765)
Net commissions and other income (2) | 426,029 | 168,349 | 41,122 | (148,609) | 486,891 | 61,758 | 40,241 | (8) | 588,882
Net gains arising from trading activity (3) | 20,220 | 387 | 2,085 | 46,546 | 69,238 | (40,129) | 20,830 | 21 | 49,960
Share of profit of associates under the equity method | — | — | — | 67,797 | 67,797 | — | 1,842 | (917) | 68,722
Gains/(losses) on disposal of subsidiaries and other assets | — | 7 | — | 6,660 | 6,667 | 2,596 | 904 | — | 10,167
Net operating revenue | 992,812 | 431,894 | 51,765 | 105,101 | 1,581,572 | 1,019,790 | 266,073 | 68 | 2,867,503
Operating expenses | 460,918 | 102,948 | 21,401 | 16,482 | 601,749 | 357,092 | 113,255 | 922 | 1,073,018
Results on modification (4) | — | — | — | — | — | (309,865) | — | — | (309,865)
Impairment for credit and financial assets (5) | (65,993) | (181,937) | 594 | 33,602 | (213,734) | (74,068) | (8,327) | — | (296,129)
Other impairments and provisions (6) | (158) | — | — | (209,790) | (209,948) | (537,143) | (6,507) | (6,435) | (760,033)
Net income before income tax | 465,743 | 147,009 | 30,958 | (87,569) | 556,141 | (258,378) | 137,984 | (7,289) | 428,458
Income tax | (144,633) | (45,814) | (9,690) | (7,441) | (207,578) | (60,614) | (36,128) | — | (304,320)
Net income after income tax |  |  |  |  |  |  |  |  |
from continuing operations | 321,110 | 101,195 | 21,268 | (95,010) | 348,563 | (318,992) | 101,856 | (7,289) | 124,138
Income arising from discontinued operations | — | — | — | — | — | — | 3,772 | 1,765 | 5,537
Net income for the year | 321,110 | 101,195 | 21,268 | (95,010) | 348,563 | (318,992) | 105,628 | (5,524) | 129,675
Non-controlling interests | — | — | — | 5,020 | 5,020 | 108,125 | (35,323) | — | 77,822
Net income for the year attributable to Bank's Shareholders | 321,110 | 101,195 | 21,268 | (89,990) | 353,583 | (210,867) | 70,305 | (5,524) | 207,497

1) Includes the contribution associated with the investments held in Angola, in Banco Millennium Atlântico.
2) Includes net fees and commissions income, other operating income/(loss), net gains from insurance activity and dividends from
equity instruments.
3) Includes results from financial operations at fair value through profit or loss, results from foreign exchange, results from hedge
accounting operations, results from derecognition of financial assets and financial liabilities measured at amortised cost and results
from derecognition of financial assets measured at fair value through other comprehensive income.
4) ) Results mainly from the amount associated to potential costs arising from the moratorium program in Poland (credit holidays),
reclassified from other impairments and provisions. It's also included the results of contractual amendments, namely, costs arising
from negotiations with customers holding mortgage loans in foreign currency, hitherto accounted for in other impairments and
provisions (the amounts referring to 2021, given their immateriality in this context, were not restated).
5) Includes impairment of financial assets at amortised cost, for loans and advances of credit institutions, for loans to customers (net
of recoveries - principal and accrual) and for debt instruments related to credit operations. It also includes impairment of financial
assets at amortised cost not associated with credit operations.
6) Includes impairment of non-current assets held for sale, investments in associated companies, goodwill, other assets and provisions,
highlighting the provisions for legal proceedings related to mortgage loans granted in Swiss francs, booked by the Polish subsidiary.

| 2022 REPORT & ACCOUNTS

364 |
As at 31 December 2022, the net contribution of the major geographic segments, for the balance sheet is analysed as
follows:

| (Thousands of euros)
| 2022
| Portugal |  |  |  |
| Retail banking | Companies, Corporate and Investment banking | Private banking | Other | Total | Poland | Mozambique | Other (1) | Consolidated
BALANCE SHEET |  |  |  |  |  |  |  |  |
Cash and Loans and advances to credit institutions | 14,454,223 | 1,479,714 | 2,610,460 | (14,553,732) | 3,990,665 | 2,193,520 | 1,014,710 | — | 7,198,895
Loans and advances to customers (1) | 25,609,019 | 11,885,264 | 344,077 | 1,376,082 | 39,214,442 | 16,355,525 | 627,717 | — | 56,197,684
Financial assets (2) | 2,100,135 | — | — | 12,795,575 | 14,895,710 | 4,506,830 | 951,716 | (33) | 20,354,223
Other assets | 92,077 | 13,794 | 2,823 | 5,058,405 | 5,167,099 | 641,572 | 230,266 | 70,802 | 6,109,739
Total Assets | 42,255,454 | 13,378,772 | 2,957,360 | 4,676,330 | 63,267,916 | 23,697,447 | 2,824,409 | 70,769 | 89,860,541
Resources from other credit institutions (3) | 458,034 | 1,799,496 | — | (947,978) | 1,309,552 | 155,411 | 3,397 | — | 1,468,360
Resources from customers (4) | 39,318,562 | 10,577,717 | 2,734,372 | 103,109 | 52,733,760 | 20,941,241 | 2,231,813 | — | 75,906,814
Debt securities issued (5) | 1,217,830 | 1,953 | 133,094 | 1,418,150 | 2,771,027 | 52,066 | — | — | 2,823,093
Other financial liabilities (6) | — | — | — | 1,216,914 | 1,216,914 | 535,648 | — | — | 1,752,562
Other liabilities (7) | 51,224 | 69,045 | 1,058 | 960,349 | 1,081,676 | 839,464 | 68,007 | — | 1,989,147
Total Liabilities | 41,045,650 | 12,448,211 | 2,868,524 | 2,750,544 | 59,112,929 | 22,523,830 | 2,303,217 | — | 83,939,976
Total Equity | 1,209,804 | 930,561 | 88,836 | 1,925,786 | 4,154,987 | 1,173,617 | 521,192 | 70,769 | 5,920,565
Total Liabilities and Equity | 42,255,454 | 13,378,772 | 2,957,360 | 4,676,330 | 63,267,916 | 23,697,447 | 2,824,409 | 70,769 | 89,860,541
Number of employees | 3,814 | 522 | 137 | 1,779 | 6,252 | 6,987 | 2,504 | 0 | 15,743

1) Includes loans to customers at amortised cost net of impairment, debt instruments at amortised cost associated to credit operations net of
impairment and balance sheet amount of loans to customers at fair value through profit or loss.
2) Includes debt instruments at amortised cost not associated with credit operations (net of impairment), financial assets at fair value through
profit or loss (excluding the ones related to loans to customers), financial assets at fair value through other comprehensive income , assets with
repurchase agreement and hedging derivatives.
3) Includes resources and other financing from central banks and resources from other credit institutions.
4) Corresponds to deposits and other resources from customers (including resources from customers at amortised cost and customer deposits at
fair value through profit or loss).
5) Includes non-subordinated debt securities at amortized cost and financial liabilities at fair value through profit or loss (debt securities and
certificates).
6) Includes financial liabilities held for trading, subordinated debt and hedging derivatives.
7) Includes provisions, current and deferred tax liabilities and other liabilities.

2022 REPORT & ACCOUNTS |

| 365
As at 31 December 2021, the net contribution of the major geographic segments, for the income statement, is
analysed as follows:

| (Thousands of euros)
| 2021
| Portugal |  |  |  |
| Retail banking | Companies, Corporate and Investment banking | Private banking | Other | Total | Poland | Mozambique | Other (1) | Consolidated
INCOME STATEMENT |  |  |  |  |  |  |  |  |
Interest and similar income | 452,648 | 265,752 | 5,521 | 137,092 | 861,013 | 622,950 | 222,067 | 3,094 | 1,709,124
Interest expense and similar charges | (4,683) | (6,317) | (1,117) | (17,558) | (29,675) | (28,264) | (62,585) | 1 | (120,523)
Net interest income | 447,965 | 259,435 | 4,404 | 119,534 | 831,338 | 594,686 | 159,482 | 3,095 | 1,588,601
Commissions and other income | 462,357 | 165,373 | 36,483 | (4,042) | 660,171 | 285,350 | 41,049 | 34 | 986,604
Commissions and other costs | (52,274) | (20,248) | (2,064) | (139,394) | (213,980) | (164,680) | (7,064) | (1,124) | (386,848)
Net commissions and other income (2) | 410,083 | 145,125 | 34,419 | (143,436) | 446,191 | 120,670 | 33,985 | (1,090) | 599,756
Net gains arising from trading activity (3) | 18,449 | 286 | 1,388 | 55,444 | 75,567 | (5,978) | 16,947 | 2 | 86,538
Share of profit of associates under the equity method | — | — | — | 58,317 | 58,317 | — | — | (1,380) | 56,937
Gains/(losses) on disposal of subsidiaries and other assets | — | 4 | — | 2,164 | 2,168 | 398 | 4 | — | 2,570
Net operating revenue | 876,497 | 404,850 | 40,211 | 92,023 | 1,413,581 | 709,776 | 210,418 | 627 | 2,334,402
Operating expenses | 469,851 | 111,207 | 21,123 | 90,678 | 692,859 | 330,231 | 91,584 | 924 | 1,115,598
Impairment for credit and financial assets (4) | (75,370) | (150,831) | 3,005 | (56,120) | (279,316) | (71,365) | (5,894) | — | (356,575)
Other impairments and provisions (5) | (69) | — | — | (159,300) | (159,369) | (527,573) | (8,050) | (9,500) | (704,492)
Net income before income tax | 331,207 | 142,812 | 22,093 | (214,075) | 282,037 | (219,393) | 104,890 | (9,797) | 157,737
Income tax | (103,402) | (44,722) | (6,960) | 46,041 | (109,043) | (72,534) | (22,049) | — | (203,626)
Net income after income tax from continuing operations | 227,805 | 98,090 | 15,133 | (168,034) | 172,994 | (291,927) | 82,841 | (9,797) | (45,889)
Income arising from discontinued operations | — | — | — | — | — | — | 18,587 | 52,294 | 70,881
Net income for the year | 227,805 | 98,090 | 15,133 | (168,034) | 172,994 | (291,927) | 101,428 | 42,497 | 24,992
Non-controlling interests (6) | — | — | — | (201) | (201) | 145,672 | (32,380) | (1) | 113,090
Net income for the year attributable to Bank's Shareholders | 227,805 | 98,090 | 15,133 | (168,235) | 172,793 | (146,255) | 69,048 | 42,496 | 138,082

1) Includes the contribution associated with the investments held in Angola, in Banco Millennium Atlântico.
2) Includes net fees and commissions income, other operating income/(loss), net gains from insurance activity and dividends from equity
instruments.
3) Includes results from financial operations at fair value through profit or loss, results from foreign exchange, results from hedge accounting
operations, results from derecognition of financial assets and financial liabilities measured at amortised cost and results from derecognition of
financial assets measured at fair value through other comprehensive income.
4) Includes impairment of financial assets at amortised cost, for loans and advances of credit institutions, for loans to customers (net of
recoveries - principal and accrual) and for debt instruments related to credit operations. It also includes impairment of financial assets at
amortised cost not associated with credit operations.
5) Includes impairment of non-current assets held for sale, investments in associated companies, goodwill, other assets and provisions,
highlighting the provisions for legal proceedings related to mortgage loans granted in Swiss francs, booked by the Polish subsidiary.
6) Includes the non-controlling interests of BIM Group related to Seguradora Internacional de Moçambique, S.A., entity classified as a
discontinued operation.

| 2022 REPORT & ACCOUNTS

366 |
As at 31 December 2021, the net contribution of the major geographic segments, for the balance sheet is analysed as
follows:

| (Thousands of euros)
| 2021
| Portugal |  |  |  |
| Retail banking | Companies, Corporate and Investment banking | Private banking | Other | Total | Poland | Mozambique | Other (1) | Consolidated
BALANCE SHEET |  |  |  |  |  |  |  |  |
Cash and Loans and advances to credit institutions | 12,164,325 | 1,589,469 | 2,456,868 | (9,485,129) | 6,725,533 | 861,770 | 701,807 | 322,188 | 8,611,298
Loans and advances to customers (1) | 25,010,925 | 12,077,141 | 344,222 | 1,147,494 | 38,579,782 | 17,206,345 | 573,802 | — | 56,359,929
Financial assets (2) | 1,222,529 | — | — | 15,423,364 | 16,645,893 | 4,033,150 | 1,056,108 | 4,987 | 21,740,138
Other assets | 69,403 | 7,933 | 1,660 | 5,185,992 | 5,264,988 | 672,901 | 194,990 | 60,568 | 6,193,447
Total Assets | 38,467,182 | 13,674,543 | 2,802,750 | 12,271,721 | 67,216,196 | 22,774,166 | 2,526,707 | 387,743 | 92,904,812
Resources from other credit institutions (3) | 362,803 | 3,107,835 | — | 5,301,090 | 8,771,728 | 117,674 | 6,672 | — | 8,896,074
Resources from customers (4) | 35,416,593 | 9,287,187 | 2,555,177 | 453,445 | 47,712,402 | 19,953,653 | 1,894,172 | — | 69,560,227
Debt securities issued (5) | 1,396,658 | 1,418 | 165,410 | 2,198,023 | 3,761,509 | 8,632 | — | — | 3,770,141
Other financial liabilities (6) | — | — | — | 1,501,747 | 1,501,747 | 501,480 | — | — | 2,003,227
Other liabilities (7) | 46,338 | 61,480 | 1,021 | 810,421 | 919,260 | 626,847 | 66,959 | 20 | 1,613,086
Total Liabilities | 37,222,392 | 12,457,920 | 2,721,608 | 10,264,726 | 62,666,646 | 21,208,286 | 1,967,803 | 20 | 85,842,755
Total Equity | 1,244,790 | 1,216,623 | 81,142 | 2,006,995 | 4,549,550 | 1,565,880 | 558,904 | 387,723 | 7,062,057
Total Liabilities and Equity | 38,467,182 | 13,674,543 | 2,802,750 | 12,271,721 | 67,216,196 | 22,774,166 | 2,526,707 | 387,743 | 92,904,812
Number of employees | 3,897 | 541 | 140 | 1,711 | 6,289 | 7,079 | 2,496 | 4 | 15,868

1) Includes loans to customers at amortised cost net of impairment, debt instruments at amortised cost associated to credit operations net of
impairment and balance sheet amount of loans to customers at fair value through profit or loss.
2) Includes debt instruments at amortised cost not associated with credit operations (net of impairment), financial assets at fair value through
profit or loss (excluding the ones related to loans to customers), financial assets at fair value through other comprehensive income , assets with
repurchase agreement and hedging derivatives.
3) Includes resources and other financing from central banks and resources from other credit institutions.
4) Corresponds to deposits and other resources from customers (including resources from customers at amortised cost and customer deposits at
fair value through profit or loss).
5) Includes non-subordinated debt securities at amortized cost and financial liabilities at fair value through profit or loss (debt securities and
certificates).
6) Includes financial liabilities held for trading, subordinated debt and hedging derivatives.
7) Includes provisions, current and deferred tax liabilities and other liabilities.

2022 REPORT & ACCOUNTS |

| 367
Reconciliation of net income of reportable segments with the net income attributable to
shareholders

| (Thousands of euros)
| 2022 | 2021
Net contribution |  |
Retail banking in Portugal | 321,110 | 227,805
Companies, Corporate and Investment banking | 101,195 | 98,090
Private Banking | 21,268 | 15,133
Foreign business (continuing operations) | (224,425) | (218,883)
Non-controlling interests (1) | 72,802 | 113,291
| 291,950 | 235,436
Income arising from discontinued or discontinuing operations | 5,537 | 70,881
| 297,487 | 306,317
Amounts not allocated to segments |  |
Net interest income of the bond portfolio | 48,729 | 29,504
Net interest income - TLTRO | 41,555 | 81,266
Foreign exchange activity | 36,209 | 28,539
Gains / (losses) arising from sales of subsidiaries and other assets | 6,660 | 2,164
Equity accounted earnings | 67,797 | 58,317
Impairment and other provisions (2) | (176,188) | (215,421)
Operational costs (3) | (16,482) | (90,678)
Gains on sale of Portuguese public debt | (24,336) | 39,430
Gains on sale of foreign public debt | 15,700 | 19,786
Mandatory contributions | (88,528) | (77,222)
Loans sale | 8,291 | (3,407)
Income from other financial assets not held for trading mandatorily at fair value through profit or loss (4) | 3,474 | (33,774)
Taxes (5) | (7,441) | 46,040
Non-controlling interests | 5,020 | (201)
Others (6) | (10,450) | (52,578)
Total not allocated to segments | (89,990) | (168,235)
Consolidated net income | 207,497 | 138,082

(1) Corresponds mainly to the income attributable to third parties related to the subsidiaries in Poland and in Mozambique.
(2) Includes impairments for non-current assets held for sale, impairments for other assets, provisions for administrative infractions,
various contingencies and other impairments and/or provisions not allocated to business segments.
(3) Corresponds mainly to headcount adjustment costs recorded in both periods.
4) Includes gains/(losses) from corporate restructuring funds.
(5) Includes deferred tax revenue, net of current non-segment tax expense, namely the tax effect associated with the impacts of the
previous items, calculated based on a marginal tax rate.
(6) It includes other operations not allocated previously namely funding for non-interest bearing assets and strategic financial
investments.

| 2022 REPORT & ACCOUNTS

368 |
53.Solvency
The Group’s own funds are determined according to the established regulation, in particular, according to Directive
2013/36/EU and Regulation (EU) 575/2013, approved by the European Parliament and the Council (CRD IV/CRR).
Total capital includes tier 1 and tier 2. Tier 1 comprises common equity tier 1 (CET1) and additional tier 1.
Common equity tier 1 includes: (i) paid-up capital, share premium, reserves and retained earnings deducted
anticipated dividends and non-controlling interests; ii) and deductions related to own shares and loans to finance the
acquisition of shares of the Bank, the shortfall of value adjustments and provisions to expected losses concerning risk‐
weighted exposure amounts calculated according to the IRB approach, goodwill and other intangible assets and the
additional value adjustments necessary for the prudent valuation requirements applied to all assets at fair value,
adjustments related to minimum commitment with collective investments undertakings, insufficient coverage for non-
performing exposures and with the amount of securitisation positions, eligible for deduction as an alternative to a 1 250
% risk weight. Reserves and retained earnings are adjusted by the reversal of unrealised gains and losses on cash-flow
hedge transactions and on financial liabilities valued at fair value through profits and losses, to the extent related to
own credit risk. The non-controlling interests are only eligible up to the amount of the Group’s capital requirements
attributable to the minorities. In addition, the deferred tax assets arising from unused tax losses carried forward are
deducted, as well as the deferred tax assets arising from temporary differences relying on the future profitability and
the interests held in financial institutions and insurers of at least 10%, in this case only in the amount that exceeds the
thresholds of 10% and 15% of the common equity tier 1, when analysed on an individual and aggregated basis,
respectively. The irrevocable payment commitments for the Single Resolution Fund, the fair value of the collateral for
irrevocable commitments from the Deposits Guarantee Fund and the additional coverage for non-performing exposures,
are also deducted, due to a SREP (Supervisory Review and Evaluation Process) recommendation.
Additional tier 1 comprises preference shares, hybrid instruments and perpetual bonds representing subordinated debt
that are compliant with the issue conditions established in the Regulation and non-controlling interests related to
minimum level 1 additional capital requirements, of institutions that are not totally owned by the Group.
Tier 2 includes the subordinated debt that is compliant with the Regulation and the non-controlling interests related to
minimum total capital requirements of institutions that are not totally owned by the Group. Additionally, Tier 2
instruments held in financial institutions and insurers of at least 10% are deducted.
The legislation in force stipulates a transitional period between the own funds calculated under national law until 31
December 2013, and own funds estimated according to EU law, in order to exclude some elements previously
considered (phase-out) and include new elements (phase-in). The transitional period was extended to the end of 2017
for most of the elements, except for the deferred tax assets already recorded on the balance sheet of 1 January 2014,
according to the new regulation, which period ends in 2023.
With the IFRS9 introduction the Group has decided to gradually recognise the impacts, according to artº 473º-A of CRR.
The group also decided to adopt, until the end of 2022, the option to gradually recognise the change in unrealized gains
and losses measured at fair value through other comprehensive income, according to artº 468 of the CRR.
CRD IV/CRR establishes Pilar 1 capital requirements for CET1, Tier 1 and Total Capital. However, under the scope of
SREP , European Central Bank notified BCP about the need to comply with phased-in capital ratios, including additional
Pilar 2 requirements, O-SII and capital conservation buffer, as following:

2022 Minimum Capital Requirements
BCP Consolidated | Phased-in | of which: | Fully implemented | of which:
Pilar 1 | Pilar 2 | Buffers | Pilar 1 | Pilar 2 | Buffers
CET1 | 9.16% | 4.50% | 1.41% | 3.25% | 9.41% | 4.50% | 1.41% | 3.50%
T1 | 11.13% | 6.00% | 1.88% | 3.25% | 11.38% | 6.00% | 1.88% | 3.50%
Total | 13.75% | 8.00% | 2.50% | 3.25% | 14.00% | 8.00% | 2.50% | 3.50%

The Bank meets all the requirements and other recommendations issued by the supervisor on this matter.

2022 REPORT & ACCOUNTS |

| 369
The Group has adopted the methodologies based on internal rating models (IRB) for the calculation of capital
requirements for credit and counterparty risk, covering a substantial part of both its retail portfolio in Portugal and
Poland and its corporate portfolio in Portugal. The Group has adopted the advanced approach (internal model) for the
coverage of trading portfolio’s general market risk and for exchange rate risks generated in exposures in the perimeter
centrally managed from Portugal, and the standard method was used for the purposes of operational risk coverage. The
capital requirements of the other portfolios/geographies were calculated using the standardised approach.
The own funds and the capital requirements determined according to the CRD IV/CRR (phased-in) methodologies
previously referred, are the following:

| (Thousands of euros)
| 2022 | 2021
Common equity tier 1 (CET1) |  |
Share capital | 3,000,000 | 4,725,000
Share Premium | 16,471 | 16,471
Reserves and retained earnings | 1,715,797 | 957,922
Non-controlling interests eligible to CET1 | 433,767 | 451,550
Regulatory adjustments to CET1 | 276,422 | (778,167)
| 5,442,457 | 5,372,776
Tier 1 |  |
Capital Instruments | 400,000 | 400,000
Non-controlling interests eligible to AT1 | 96,341 | 109,266
| 5,938,798 | 5,882,042
Tier 2 |  |
Subordinated debt | 1,047,875 | 1,050,000
Non-controlling interests eligible to Tier 2 | 271,800 | 277,007
Other | 20,240 | 3,751
| 1,339,915 | 1,330,758
Total own funds | 7,278,713 | 7,212,800
RWA - Risk weighted assets |  |
Credit risk | 36,265,788 | 39,810,329
Market risk | 2,611,404 | 1,947,366
Operational risk | 4,178,551 | 4,123,409
CVA | 47,016 | 51,426
| 43,102,759 | 45,932,530
Capital ratios |  |
CET1 | 12.6% | 11.7%
Tier 1 | 13.8% | 12.8%
Tier 2 | 3.1% | 2.9%
| 16.9% | 15.7%

The presented amounts include the accumulated net income.

| 2022 REPORT & ACCOUNTS

370 |
54.Risk Management
The Group is subject to several risks during the course of its business. The risks from different companies of the Group
are managed centrally, in coordination with the local departments and considering the specific risks of each business.
The Group's risk-management policy is designed to permanently ensure an adequate relationship between its own funds
and the business it develops, as well as the corresponding evaluation of the risk/return profile by business line. Under
this scope, the monitoring and control of the main types of financial risks (e.g. credit, market, operational) or non-
financial risks (e.g. legal and compliance, reputational) to which the Group's business is subject to.
The Bank implemented a regular process for identifying and assessing the risks to which its activity is exposed, which
conclusions are presented to the management bodies and influence the update of the Group’s risk appetite and risk
strategy.
Internal organisation
Banco Comercial Português Board of Directors is responsible for the definition of the risk strategy and policies,
including the approval of the principles and rules of the highest level to be followed in risk management, as well as the
guidelines dictating the allocation of capital to the business lines.
The Board of Directors, through the Audit Committee and Committee for Risk Assessment, ensures the existence of
adequate risk control and of risk-management systems at Group level and for each entity. The Board of Directors also
approves the risk-tolerance level acceptable to the Group, proposed by its Executive Committee.
The Risk Committee is responsible for monitoring the overall levels of risk incurred, ensuring that these are compatible
with the goals and strategies approved for the business. Other commissions regularly monitor specific risks, namely the
Compliance and Operational Risks Commission, the Credit and Non-performing Assets Monitoring Commission, the
Pension Funds Risk Monitoring Commission, the Operational Resilience Commission (with a focus on information
technologies and cybernetics), the Sustainability Commission and the Corporate Risk Monitoring Commission.
The Chief Risk Officer is responsible for the control of risks in all Group entities, for the identification of all risks to
which the Group activity is exposed and for the proposal of measures to improve risks control. The Chief Risk Officer
also ensures that risks are monitored on an overall basis and that there is alignment of concepts, practices and goals in
risk management. The activity of every entity included within the Banco Comercial Português consolidation perimeter is
governed by the principles and decisions established centrally by the Board of Directors and the main subsidiaries are
provided with Risk Office structures which are established in accordance with the risks inherent to their particular
business. A Risk Control Commission has been set up at each relevant subsidiary, responsible for the control of risks at
local level, in which the Chief Risk Officer takes part.
The Group Head of Compliance is responsible for implementing systems for monitoring the compliance with legal
obligations and responsibilities to which the Bank is subject, as well, the prevention, monitoring and reporting of risks
in organizational processes, which include, among others, the prevention and repression of money laundering,
combating financing of terrorism, prevention of conflicts of interest, issues related to abuse of market and compliance
with the disclosure requirements to customers.

2022 REPORT & ACCOUNTS |

| 371
Risk assessment
Credit Risk
Credit granting is based on a prior classification of the customers’ risk and on a thorough assessment of the level of
protection provided by the underlying collateral. In order to do so, a single risk-notation system has been introduced,
the Rating Master Scale, based on the expected probability of default, allowing greater discrimination in the
assessment of the customers and better establishment of the hierarchies of the associated risk.
The Rating Master Scale also identifies those customers that show a worsening credit capacity and, in particular, those
classified as being in default. All rating and scoring models used by the Group have been duly calibrated for the Rating
Master Scale. The protection-level concept has been introduced as a crucial element of evaluation of the effectiveness
of the collateral in credit-risk mitigation, leading to a more active collateralization of loans and to a better adequacy
of pricing regarding the risk incurred.
The gross Group’s exposure to credit risk (original exposure) is presented in the following table:

(Thousands of euros)
Risk items | 2022 | 2021
Central Governments or Central Banks | 22,898,387 | 24,942,714
Regional Governments or Local Authorities | 1,012,723 | 1,243,453
Administrative and non-profit Organisations | 412,223 | 462,481
Multilateral Development Banks | 114,633 | 18,790
Other Credit Institutions | 3,279,977 | 2,777,375
Retail and Corporate customers | 69,798,319 | 71,911,594
Other items (*) | 10,153,154 | 8,562,386
| 107,669,416 | 109,918,793

Note: gross exposures of impairment and amortization, in accordance with the prudential consolidation perimeter. Includes
securitization positions.
(*) In addition to positions in equity, collective investment and securitization, the Other items contain other assets subject to credit
risk in accordance with Article 134 of the CRR.
The evaluation of the risk associated to the loan portfolio and quantification of the respective losses expected
considers the following methodological notes.
a) Collaterals and Guarantees
On the risk evaluation of an operation or of a group of operations, the mitigation elements of credit risk associated to
those operations are considered in accordance with the rules and internal procedures that fulfil the requirements
defined by the regulations in force, also reflecting the experience of the loan's recovery areas and the Legal
Department opinions with respect to the entailment of the various mitigation instruments.
The collaterals and the relevant guarantees can be aggregated in the following categories:
- financial collaterals, real estate collaterals or other collaterals;
- receivables;
- first demand guarantees, issued by banks or other entities with Risk Grade 7 or better on the Rating Master Scale;
- personal guarantees when the persons are classified with Risk Grade 7 or better;
- credit derivatives.

| 2022 REPORT & ACCOUNTS

372 |
The financial collaterals accepted are those that are traded in a recognised stock exchange, i.e., on an organized
secondary market, liquid and transparent, with public bid-ask prices, located in countries of the European Union,
United Kingdom, United States, Japan, Canada, Hong Kong or Switzerland.
In this context, it is important to refer that the Bank’s shares are not accepted as financial collaterals of new credit
operations and are only accepted for the reinforcement of guarantees of existing credit operations, or in restructuring
process associated to credit recoveries.
Regarding guarantees and credit derivatives, it can be applied the substitution principle by replacing the Risk Grade of
the client by the Risk Grade of the guarantor, (if the Risk of Grade Degree of the guarantor is better than the client’s),
when the protection is formalized through:
- State, Financial Institutions or Mutual Guarantee Societies guarantees exist;
- personal guarantees (or, in the case of Leasing, there is a recovery agreement of the provider);
- Credit derivatives;
- Formalization of the clause of the contracting party in leasing contracts in which it is an entity that is in a relationship
of dominion or group with the lessee.
An internal level of protection is attributed to all credit operations at the moment of the credit granting decision,
considering the credit amount as well as the value and type of the collaterals involved. The protection level
corresponds to the loss reduction in case of default that is linked to the various collateral types, considering their
market value and the amount of the associated exposure.
In the case of financial collaterals, adjustments are made to the protection value by the use of a set of haircuts, in
order to reflect the price volatility of the financial instruments.
In the case of real estate mortgages, the initial appraisal of the real estate value is done during the credit analysis and
before decision process.
Either the initial evaluations or the subsequent reviews carried out are performed by external expert valuers and the
ratification process is centralized in the Appraisals Unit, which is independent of the clients’ areas.
In any case, they are the subject to a written report, in a standardized digital format, based on a group of predefined
methods that are aligned with the sector practices – income, replacement cost and/or market comparative -
mentioning the obtained value, for both the market value and for purposes of the mortgage guarantee, depending on
the type of the real estate. The evaluations have a declaration/certification of an expert valuer since 2008, as
requested by Regulation (EU) 575/2013 and Law 153/2015 of 14 September and are ratified by the Appraisals Unit.
Regarding residential real estate, after the initial valuation and in accordance with Notice n. 5/2006 of Bank of
Portugal and e CRR 575/2013, the Bank monitors the respective values through market indexes. If the index is lower
than 0.9, the Bank revaluates choosing one of the following two methods:
i) - depreciation of the property by direct application of the index, if the amount owed does not exceed Euros 300,000;
ii) - review of the property value by external valuators, depending on the value of the credit operation, and in
accordance with the established standards from ECB and Bank of Portugal.
For all non-residential real estate, the Bank also monitors its values through market indexes and to the regular
valuation reviews with the minimum periodicities in accordance with the Regulation (EU) 575/2013, in the case of
offices, commercial spaces, warehouses and industrial premises.
For all real estate (residential or non-residential) for which the monitoring result in significant devaluation of the real
estate value (more than 10%), a valuation review is subsequently carried out by an expert valuer, preserving the
referred i) above.
For the remaining real estate (land or countryside buildings for example) there are no market indexes available for the
monitoring of appraisal values, after the initial valuations. Therefore, for these cases and in accordance with the
minimum periodicity established for the monitoring and reviewing of this type of real estate, valuation reviews are
carried out by expert valuers.

2022 REPORT & ACCOUNTS |

| 373
The indexes currently used are supplied to the Bank by an external specialized entity that, for more than a decade, has
been collecting and processing the data upon which the indexes are built.
In the case of financial collaterals, their market value is daily and automatically updated, through the IT connection
between the collaterals management system and the relevant financial markets data.
b) Risk grades
Credit granting is based on the previous risk assessment of clients and also on a rigorous assessment of the protection
level provided by the underlying collaterals. For this purpose, a single risk grading system is used - the Rating Master
Scale - based on Probability of Default (PD), allowing for a greater discriminating power in clients' assessment and for a
better hierarchy of the associated risk. The Rating Master Scale also allows to identify clients that show signs of
degradation in their credit capacity and, in particular, those that are classified in a default situation. All rating systems
and models used by the Group were calibrated for the Rating Master Scale.
Aiming at an adequate assessment of credit risk, the Group defined a set of macro segments and segments which are
treated through different rating systems and models that relate the internal risk grades and the clients’ PD, ensuring a
risk assessment that considers the clients’ specific features in terms of their respectively risk profiles.
The assessment made by these rating systems and models result in the risk grades of the Master Scale, that has fifteen
grades, where the last three correspond to relevant downgrades of the clients’ credit quality and are referred to by
“procedural risk grades”: 13, 14 and 15, that correspond, in this order, to situations of increased severity in terms
default, as risk grade 15 is a Default situation.
The non-procedural risk grades are attributed by the rating systems through automatic decision models or by the Rating
Division – a unit which is independent from the credit analysis and decision areas and bodies- and are reviewed/updated
periodically or whenever this is justified by events.
The models within the various rating systems are regularly subject to validation, made by the Models Validation and
Monitoring Office, which is independent from the units that are responsible for the development and maintenance of
the rating models.
The conclusions of the validations by the Models Validation and Monitoring Office, as well the respective
recommendations and proposal for changes and/or improvements, are analysed and ratified by a specific Validation
Committee, composed in accordance to the type of model analysed. The proposals for models’ changes originated by
the Validation Committee are submitted to the approval of the Risk Committee.
The following table lists the equivalence between the internal rating levels (Rating Master Scale) and the external
ratings of the international rating agencies:

Internal risk grade | External ratings
Fitch | S&P | Moody's | DBRS
1 |  | AAA | AAA | Aaa | AAA
1 |  | AA+ | AA+ | Aa1 | AA (high)
2 |  | AA | AA | Aa2 | AA
2 |  | AA- | AA- | Aa3 | AA (low)
3 |  | A+ | A+ | A1 | A (high)
3 |  | A | A | A2 | A
4 |  | A- | A- | A3 | A (low)
4 |  | BBB+ | BBB+ | Baa1 | BBB (high)
5 |  | BBB | BBB | Baa2 | BBB
6 |  | BBB- | BBB- | Baa3 | BBB (low)
7 |  | BB+ | BB+ | Ba1 | BB (high)
8 |  | BB | BB | Ba2 | BB
9 |  | BB- | BB- | Ba3 | BB (low)
10 |  | B+ | B+ | B1 | B (high)
11 |  | B | B | B2 | B
12 |  | ≤ B- | ≤ B- | ≤ B3 | ≤ B-

| 2022 REPORT & ACCOUNTS

374 |
c) Impairment and Write-offs
The credit impairment calculation as at 31 December 2022 and 2021 integrates the general principles defined in
International Financial Reporting Standards (IFRS 9) and the guidelines issued by the Bank of Portugal through Circular
Letter CC/2018/00000062, in order to align the calculation process used in the Group with the best international
practices in this area.
As at 31 December 2022, the financial instruments subject to impairment requirements under IFRS 9, (do not include
equity instruments as accounting policy 1.C1.1.2, analysed by stage, are detailed in the following tables:

(Thousands of euros)
Category | 2022
Gross exposure
Stage 1 | Stage 2 | Stage 3 | POCI | Total
Financial assets at amortised cost |  |  |  |  |
Loans and advances to credit institutions (note 21) | 964,296 | — | — | — | 964,296
Loans and advances to customers (note 22) | 46,395,996 | 7,564,235 | 2,170,979 | 46,956 | 56,178,166
Debt instruments (note 23) | 12,990,232 | 55,787 | 3,802 | — | 13,049,821
Debt instruments at fair value through other comprehensive income (note 24) (*) | 7,434,152 | — | 1,067 | — | 7,435,219
Guarantees and other commitments (note 45) (**) | 14,303,231 | 1,768,595 | 364,691 | 921 | 16,437,438
Total | 82,087,907 | 9,388,617 | 2,540,539 | 47,877 | 94,064,940

(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1.C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments

(Thousands of euros)
Category | 2022
Impairment losses
Stage 1 | Stage 2 | Stage 3 | POCI | Total
Financial assets at amortised cost |  |  |  |  |
Loans and advances to credit institutions (note 21) | 862 | — | — | — | 862
Loans and advances to customers (note 22) | 214,470 | 284,448 | 985,557 | 17,898 | 1,502,373
Debt instruments (note 23) | 13,409 | 720 | 110 | — | 14,239
Debt instruments at fair value through other comprehensive income (note 24) (*) | — | — | 1,067 | — | 1,067
Guarantees and other commitments (note 39) (**) | 11,307 | 14,893 | 84,435 | 119 | 110,754
Total | 240,048 | 300,061 | 1,071,169 | 18,017 | 1,629,295

(Thousands of euros)
Category | 2022
Net exposure
Stage 1 | Stage 2 | Stage 3 | POCI | Total
Financial assets at amortised cost |  |  |  |  |
Loans and advances to credit institutions (note 21) | 963,434 | — | — | — | 963,434
Loans and advances to customers (note 22) | 46,181,526 | 7,279,787 | 1,185,422 | 29,058 | 54,675,793
Debt instruments (note 23) | 12,976,823 | 55,067 | 3,692 | — | 13,035,582
Debt instruments at fair value through other comprehensive income (note 24) (*) | 7,434,152 | — | — | — | 7,434,152
Guarantees and other commitments (note 45) (**) | 14,291,924 | 1,753,702 | 280,256 | 802 | 16,326,684
Total | 81,847,859 | 9,088,556 | 1,469,370 | 29,860 | 92,435,645

(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1.C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments.

2022 REPORT & ACCOUNTS |

| 375
As at 31 December 2021, the financial instruments subject to impairment requirements under IFRS 9 (do not include
equity instruments as accounting policy 1.C1.1.2, analysed by stage, are detailed in the following tables:

(Thousands of euros)
Category | 2021
Gross exposure
Stage 1 | Stage 2 | Stage 3 | POCI | Total
Financial assets at amortised cost |  |  |  |  |
Loans and advances to credit institutions (note 21) | 449,287 | 5,113 | — | — | 454,400
Loans and advances to customers (note 22) | 46,113,653 | 7,964,052 | 2,686,267 | 57,713 | 56,821,685
Debt instruments (note 23) | 8,094,290 | 122,257 | 4,451 | — | 8,220,998
Debt instruments at fair value through other comprehensive income (note 24) (*) | 12,856,165 | — | 1,092 | — | 12,857,257
Guarantees and other commitments (note 45) (**) | 13,462,773 | 1,922,031 | 412,179 | — | 15,796,983
Total | 80,976,168 | 10,013,453 | 3,103,989 | 57,713 | 94,151,323

(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1.C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments.

(Thousands of euros)
Category | 2021
Impairment losses
Stage 1 | Stage 2 | Stage 3 | POCI | Total
Financial assets at amortised cost |  |  |  |  |
Loans and advances to credit institutions (note 21) | 128 | 1,059 | — | — | 1,187
Loans and advances to customers (note 22) | 207,328 | 288,642 | 1,336,612 | 16,702 | 1,849,284
Debt instruments (note 23) | 13,187 | 2,517 | 98 | — | 15,802
Debt instruments at fair value through other comprehensive income (note 23) (*) | — | — | 1,092 | — | 1,092
Guarantees and other commitments (note 39) (**) | 12,848 | 13,033 | 84,768 | — | 110,649
Total | 233,491 | 305,251 | 1,422,570 | 16,702 | 1,978,014

(Thousands of euros)
Category | 2021
Net exposure
Stage 1 | Stage 2 | Stage 3 | POCI | Total
Financial assets at amortised cost |  |  |  |  |
Loans and advances to credit institutions (note 21) | 449,159 | 4,054 | — | — | 453,213
Loans and advances to customers (note 22) | 45,906,325 | 7,675,410 | 1,349,655 | 41,011 | 54,972,401
Debt instruments (note 23) | 8,081,103 | 119,740 | 4,353 | — | 8,205,196
Debt instruments at fair value through other comprehensive income (note 24) (*) | 12,856,165 | — | — | — | 12,856,165
Guarantees and other commitments (note 45) (**) | 13,449,925 | 1,908,998 | 327,411 | — | 15,686,334
Total | 80,742,677 | 9,708,202 | 1,681,419 | 41,011 | 92,173,309

(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1 C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments

| 2022 REPORT & ACCOUNTS

376 |
The maximum exposure to credit risk of financial assets not subject to impairment requirements is analysed as follows:

(Thousands of euros)
| 2022 | 2021
Financial assets held for trading (note 24) |  |
Debt instruments | 338,813 | 452,105
Derivatives | 394,183 | 468,642
Financial assets not held for trading mandatorily at fair value through profit or loss |  |
Debt instruments (note 24) | 504,200 | 881,556
Hedging derivatives (note 25) | 59,703 | 147,570
Total | 1,296,899 | 1,949,873

- In the case of financial assets, excluding derivatives, it is considered that its credit risk exposure is equal to its book value;
- In the case of derivatives, the maximum exposure to credit risk is its market value, plus its potential risk ("add-on").
During 2022, the changes occurred in Loans and advances to customers - gross amount are as follows:

(Thousands of euros)
| 2022
| Financial assets at amortised cost - Loans and advances to customers - Gross amount
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
Gross amount as at 1 January | 46,113,653 | 7,964,052 | 2,686,267 | 57,713 | 56,821,685
Changes in gross book value: |  |  |  |  |
Transfers from stage 1 to stage 2 | (2,111,726) | 2,111,726 | — | — | —
Transfers from stage 1 to stage 3 | (258,614) | — | 258,614 | — | —
Transfers from stage 2 to stage 1 | 1,946,027 | (1,946,027) | — | — | —
Transfers from stage 2 to stage 3 | — | (631,859) | 631,859 | — | —
Transfers from stage 3 to stage 1 | 26,176 | — | (26,176) | — | —
Transfers from stage 3 to stage 2 | — | 174,249 | (174,249) | — | —
Write-offs | (922) | (2,996) | (440,667) | (13,820) | (458,405)
Net balance of new financial assets and derecognised |  |  |  |  |
financial assets and other variations | 681,402 | (104,910) | (764,669) | 3,063 | (185,114)
Gross amount at the end of the year | 46,395,996 | 7,564,235 | 2,170,979 | 46,956 | 56,178,166

2022 REPORT & ACCOUNTS |

| 377
During 2022, the changes occurred in Loans and advances to customers - impairment are as follows:

(Thousands of euros)
| 2022
| Financial assets at amortised cost - Loans and advances to customers impairment
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
Impairment losses as at 1 January | 207,328 | 288,642 | 1,336,612 | 16,702 | 1,849,284
Change in impairment losses: |  |  |  |  |
Transfer to Stage 1 | 50,530 | (50,139) | (4,778) | 4,387 | —
Transfer to Stage 2 | (14,016) | 47,552 | (33,614) | 78 | —
Transfer to Stage 3 | (4,314) | (55,508) | 58,004 | 1,818 | —
Changes occurred due to changes in credit risk | (51,425) | 25,711 | 196,355 | 4,816 | 175,457
Write-offs | (922) | (2,996) | (440,667) | (13,820) | (458,405)
Changes due to new financial assets and derecognised financial assets and other variations | 27,289 | 31,186 | (126,355) | 3,917 | (63,963)
Impairment losses at the end of the year | 214,470 | 284,448 | 985,557 | 17,898 | 1,502,373

During 2021, the changes occurred in Loans and advances to customers - gross amount are as follows:

(Thousands of euros)
| 2021
| Financial assets at amortised cost - Loans and advances to customers - Gross amount
| Stage 1 | Stage 2 | Stage 3 | POCI | Other (1) | Total
Gross amount as at 1 January | 43,702,669 | 7,179,503 | 3,188,808 | 86,357 | (98,458) | 54,058,879
Changes in gross book value: |  |  |  |  |  |
Transfers from stage 1 to stage 2 | (2,234,691) | 2,234,691 | — | — | — | —
Transfers from stage 1 to stage 3 | (228,197) | — | 228,197 | — | — | —
Transfers from stage 2 to stage 1 | 1,691,534 | (1,691,534) | — | — | — | —
Transfers from stage 2 to stage 3 | — | (339,863) | 339,863 | — | — | —
Transfers from stage 3 to stage 1 | 30,124 | — | (30,124) | — | — | —
Transfers from stage 3 to stage 2 | — | 121,048 | (121,048) | — | — | —
Write-offs | (3,261) | (2,370) | (362,075) | (5,004) | — | (372,710)
Net balance of new financial assets and derecognised financial assets and other variations | 3,509,575 | 462,577 | (557,354) | (23,640) | 98,458 | 3,489,616
Transfers resulting from changes in the Group's structure (Banque Privée BCP (Suisse)) | (354,100) | — | — | — | — | (354,100)
Gross amount at the end of the year | 46,113,653 | 7,964,052 | 2,686,267 | 57,713 | — | 56,821,685

(1) Adjustment to the balances of 2020 made in Bank Millennium regarding mortgage loans linked to Swiss francs (transfer from the
liability item "Provisions" to the asset item "Loans and advances to customers”).

| 2022 REPORT & ACCOUNTS

378 |
During 2021, the changes occurred in Loans and advances to customers - impairment are as follows:

(Thousands of euros)
| 2021
| Financial assets at amortised cost - Loans and advances to customers impairment
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
Impairment losses as at 1 January | 169,103 | 247,252 | 1,607,223 | 12,944 | 2,036,522
Change in impairment losses: |  |  |  |  |
Transfer to Stage 1 | 56,037 | (48,127) | (7,908) | (2) | —
Transfer to Stage 2 | (14,166) | 35,066 | (20,900) | — | —
Transfer to Stage 3 | (4,097) | (27,345) | 31,505 | (63) | —
Changes occurred due to changes in credit risk | (17,162) | 29,604 | 188,368 | 5,165 | 205,975
Write-offs | (3,261) | (2,370) | (362,075) | (5,004) | (372,710)
Changes due to new financial assets and derecognised |  |  |  |  |
financial assets and other variations | 21,242 | 54,562 | (99,601) | 3,662 | (20,135)
Transfers resulting from changes in the Group's structure (Banque Privée BCP (Suisse)) | (368) | — | — | — | (368)
Impairment losses at the end of the year | 207,328 | 288,642 | 1,336,612 | 16,702 | 1,849,284

Financial assets modified during the period that have not resulted in derecognition (with impairment losses based on
expected lifetime losses) are analysed as follows:

(Thousands of euros)
Financial assets modified | 2022 | 2021
Amortised cost before changes | 396,049 | 612,501
Impairment losses before changes | (47,337) | (87,268)
Net amortised cost before changes | 348,712 | 525,233
Net gain/loss arising on changes | (32,993) | (7,949)
Net amortised cost after changes | 315,719 | 517,284

The financial assets changed since the initial recognition at a time when the impairment loss was measured based on
the expected credit losses lifetime, are analysed as follows:

(Thousands of euros)
Financial assets changed | 2022 | 2021
Amortised cost of financial assets for which credit losses expected to go from "lifetime" to 12 months | 65,942 | 61,103

2022 REPORT & ACCOUNTS |

| 379
As at 31 December 2022, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by segment and stage, are as follows:

(Thousands of euros)
| 2022
|  | Stage 2 | Stage 3 |  |
Segment | Stage 1 | No delays | Days past due <= 30 days | Days past due > 30 days | Total | Days past due <= 90 days | Days past due > 90 days | Total | POCI | Total
Gross Exposure |  |  |  |  |  |  |  |  |  |
Individuals-Mortgage | 25,213,881 | 2,320,624 | 151,906 | 89,857 | 2,562,387 | 284,276 | 142,817 | 427,093 | 10,525 | 28,213,886
Individuals-Other | 7,614,004 | 958,714 | 118,276 | 42,895 | 1,119,885 | 252,456 | 284,486 | 536,942 | 19,621 | 9,290,452
Financial Companies | 3,569,566 | 80,945 | 61 | — | 81,006 | 72,980 | 1,494 | 74,474 | 7,545 | 3,732,591
Non-financial companies - Corporate | 9,621,830 | 700,538 | 660 | 13 | 701,211 | 204,523 | 91,575 | 296,098 | — | 10,619,139
Non-financial companies - SME- Corporate | 10,238,522 | 2,798,567 | 5,339 | 2,559 | 2,806,465 | 761,101 | 95,135 | 856,236 | 6,733 | 13,907,956
Non-financial companies -SME-Retail | 6,024,603 | 1,683,407 | 30,867 | 14,532 | 1,728,806 | 231,377 | 117,109 | 348,486 | 3,453 | 8,105,348
Non-financial companies -Other | 558,812 | 46,613 | 2 | — | 46,615 | 113 | — | 113 | — | 605,540
Other loans | 11,812,537 | 342,203 | 39 | — | 342,242 | — | 30 | 30 | — | 12,154,809
Total | 74,653,755 | 8,931,611 | 307,150 | 149,856 | 9,388,617 | 1,806,826 | 732,646 | 2,539,472 | 47,877 | 86,629,721
Impairment |  |  |  |  |  |  |  |  |  |
Individuals-Mortgage | 15,380 | 23,667 | 4,083 | 5,262 | 33,012 | 56,519 | 56,440 | 112,959 | 5,452 | 166,803
Individuals-Other | 52,559 | 31,277 | 18,676 | 11,224 | 61,177 | 104,108 | 180,916 | 285,024 | 12,436 | 411,196
Financial Companies | 8,491 | 1,701 | 4 | — | 1,705 | 36,543 | 1,245 | 37,788 | — | 47,984
Non-financial companies - Corporate | 27,484 | 18,218 | 22 | — | 18,240 | 87,043 | 43,500 | 130,543 | — | 176,267
Non-financial companies - SME- Corporate | 46,296 | 81,667 | 506 | 660 | 82,833 | 298,455 | 46,890 | 345,345 | 129 | 474,603
Non-financial companies -SME-Retail | 78,239 | 92,784 | 4,090 | 3,226 | 100,100 | 106,533 | 51,896 | 158,429 | — | 336,768
Non-financial companies -Other | 512 | 129 | — | — | 129 | 5 | — | 5 | — | 646
Other loans | 11,087 | 2,860 | 5 | — | 2,865 | — | 9 | 9 | — | 13,961
Total | 240,048 | 252,303 | 27,386 | 20,372 | 300,061 | 689,206 | 380,896 | 1,070,102 | 18,017 | 1,628,228
Net exposure |  |  |  |  |  |  |  |  |  |
Individuals-Mortgage | 25,198,501 | 2,296,957 | 147,823 | 84,595 | 2,529,375 | 227,757 | 86,377 | 314,134 | 5,073 | 28,047,083
Individuals-Other | 7,561,445 | 927,437 | 99,600 | 31,671 | 1,058,708 | 148,348 | 103,570 | 251,918 | 7,185 | 8,879,256
Financial Companies | 3,561,075 | 79,244 | 57 | — | 79,301 | 36,437 | 249 | 36,686 | 7,545 | 3,684,607
Non-financial companies - Corporate | 9,594,346 | 682,320 | 638 | 13 | 682,971 | 117,480 | 48,075 | 165,555 | — | 10,442,872
Non-financial companies - SME- Corporate | 10,192,226 | 2,716,900 | 4,833 | 1,899 | 2,723,632 | 462,646 | 48,245 | 510,891 | 6,604 | 13,433,353
Non-financial companies -SME-Retail | 5,946,364 | 1,590,623 | 26,777 | 11,306 | 1,628,706 | 124,844 | 65,213 | 190,057 | 3,453 | 7,768,580
Non-financial companies -Other | 558,300 | 46,484 | 2 | — | 46,486 | 108 | — | 108 | — | 604,894
Other loans | 11,801,450 | 339,343 | 34 | — | 339,377 | — | 21 | 21 | — | 12,140,848
Total | 74,413,707 | 8,679,308 | 279,764 | 129,484 | 9,088,556 | 1,117,620 | 351,750 | 1,469,370 | 29,860 | 85,001,493
% of impairment coverage |  |  |  |  |  |  |  |  |  |
Individuals-Mortgage | 0.06% | 1.02% | 2.69% | 5.86% | 1.29% | 19.88% | 39.52% | 26.45% | 51.80% | 0.59%
Individuals-Other | 0.69% | 3.26% | 15.79% | 26.17% | 5.46% | 41.24% | 63.59% | 53.08% | 63.38% | 4.43%
Financial Companies | 0.24% | 2.10% | 6.56% | 0.00% | 2.10% | 50.07% | 83.33% | 50.74% | 0.00% | 1.29%
Non-financial companies - Corporate | 0.29% | 2.60% | 3.33% | 0.00% | 2.60% | 42.56% | 47.50% | 44.09% | 0.00% | 1.66%
Non-financial companies - SME- Corporate | 0.45% | 2.92% | 9.48% | 25.79% | 2.95% | 39.21% | 49.29% | 40.33% | 1.92% | 3.41%
Non-financial companies -SME-Retail | 1.30% | 5.51% | 13.25% | 22.20% | 5.79% | 46.04% | 44.31% | 45.46% | 0.00% | 4.15%
Non-financial companies -Other | 0.09% | 0.28% | 0.00% | 0.00% | 0.28% | 4.42% | 0.00% | 4.42% | 0.00% | 0.11%
Other loans | 0.09% | 0.84% | 12.82% | 0.00% | 0.84% | 0.00% | 30.00% | 30.00% | 0.00% | 0.11%
Total | 0.32% | 2.82% | 8.92% | 13.59% | 3.20% | 38.14% | 51.99% | 42.14% | 37.63% | 1.88%

| 2022 REPORT & ACCOUNTS

380 |
As at 31 December 2021, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by segment and stage, are as follows:

(Thousands of euros)
| 2021
|  | Stage 2 | Stage 3 |  |
Segment | Stage 1 | No delays | Days past due <= 30 days | Days past due > 30 days | Total | Days past due <= 90 days | Days past due > 90 days | Total | POCI | Total
Gross Exposure |  |  |  |  |  |  |  |  |  |
Individuals-Mortgage | 25,365,328 | 2,305,851 | 126,323 | 66,432 | 2,498,606 | 296,980 | 171,593 | 468,573 | 13,320 | 28,345,827
Individuals-Other | 7,631,117 | 820,962 | 94,862 | 40,061 | 955,885 | 251,607 | 340,511 | 592,118 | 42,163 | 9,221,283
Financial Companies | 2,946,812 | 333,975 | 71 | 13 | 334,059 | 116,539 | 61,091 | 177,630 | — | 3,458,501
Non-financial companies - Corporate | 7,994,250 | 920,647 | 436 | 409 | 921,492 | 209,359 | 365,953 | 575,312 | — | 9,491,054
Non-financial companies - SME- Corporate | 9,848,761 | 2,914,636 | 8,506 | 2,360 | 2,925,502 | 719,045 | 142,057 | 861,102 | 850 | 13,636,215
Non-financial companies -SME- Retail | 6,469,104 | 2,021,279 | 18,127 | 12,285 | 2,051,691 | 329,395 | 98,615 | 428,010 | 1,380 | 8,950,185
Non-financial companies -Other | 570,736 | 54,092 | — | — | 54,092 | 152 | — | 152 | — | 624,980
Other loans | 7,293,895 | 272,126 | — | — | 272,126 | — | — | — | — | 7,566,021
Total | 68,120,003 | 9,643,568 | 248,325 | 121,560 | 10,013,453 | 1,923,077 | 1,179,820 | 3,102,897 | 57,713 | 81,294,066
Impairment |  |  |  |  |  |  |  | — |  | —
Individuals-Mortgage | 13,417 | 11,246 | 1,991 | 3,946 | 17,183 | 48,326 | 67,393 | 115,719 | 3,159 | 149,478
Individuals-Other | 44,802 | 24,514 | 13,555 | 9,521 | 47,590 | 104,129 | 231,996 | 336,125 | 13,530 | 442,047
Financial Companies | 4,990 | 6,966 | 4 | 3 | 6,973 | 67,871 | 42,746 | 110,617 | — | 122,580
Non-financial companies - Corporate | 30,910 | 23,366 | 11 | 95 | 23,472 | 86,950 | 247,397 | 334,347 | — | 388,729
Non-financial companies - SME- Corporate | 81,639 | 118,121 | 788 | 589 | 119,498 | 260,886 | 68,570 | 329,456 | — | 530,593
Non-financial companies -SME- Retail | 47,538 | 82,720 | 2,356 | 2,543 | 87,619 | 143,756 | 51,382 | 195,138 | 13 | 330,308
Non-financial companies -Other | 297 | 136 | — | — | 136 | 76 | — | 76 | — | 509
Other loans | 9,898 | 2,780 | — | — | 2,780 | — | — | — | — | 12,678
Total | 233,491 | 269,849 | 18,705 | 16,697 | 305,251 | 711,994 | 709,484 | 1,421,478 | 16,702 | 1,976,922
Net exposure |  |  |  |  |  |  |  | — |  | —
Individuals-Mortgage | 25,351,911 | 2,294,605 | 124,332 | 62,486 | 2,481,423 | 248,654 | 104,200 | 352,854 | 10,161 | 28,196,349
Individuals-Other | 7,586,315 | 796,448 | 81,307 | 30,540 | 908,295 | 147,478 | 108,515 | 255,993 | 28,633 | 8,779,236
Financial Companies | 2,941,822 | 327,009 | 67 | 10 | 327,086 | 48,668 | 18,345 | 67,013 | — | 3,335,921
Non-financial companies - Corporate | 7,963,340 | 897,281 | 425 | 314 | 898,020 | 122,409 | 118,556 | 240,965 | — | 9,102,325
Non-financial companies - SME- Corporate | 9,767,122 | 2,796,515 | 7,718 | 1,771 | 2,806,004 | 458,159 | 73,487 | 531,646 | 850 | 13,105,622
Non-financial companies -SME- Retail | 6,421,566 | 1,938,559 | 15,771 | 9,742 | 1,964,072 | 185,639 | 47,233 | 232,872 | 1,367 | 8,619,877
Non-financial companies -Other | 570,439 | 53,956 | — | — | 53,956 | 76 | — | 76 | — | 624,471
Other loans | 7,283,997 | 269,346 | — | — | 269,346 | — | — | — | — | 7,553,343
Total | 67,886,512 | 9,373,719 | 229,620 | 104,863 | 9,708,202 | 1,211,083 | 470,336 | 1,681,419 | 41,011 | 79,317,144
% of impairment coverage |  |  |  |  |  |  |  |  |  |
Individuals-Mortgage | 0.05% | 0.49% | 1.58% | 5.94% | 0.69% | 16.27% | 39.27% | 24.70% | 23.72% | 0.53%
Individuals-Other | 0.59% | 2.99% | 14.29% | 23.77% | 4.98% | 41.39% | 68.13% | 56.77% | 32.09% | 4.79%
Financial Companies | 0.17% | 2.09% | 5.63% | 23.08% | 2.09% | 58.24% | 69.97% | 62.27% | 0.00% | 3.54%
Non-financial companies - Corporate | 0.39% | 2.54% | 2.52% | 23.23% | 2.55% | 41.53% | 67.60% | 58.12% | 0.00% | 4.10%
Non-financial companies - SME- Corporate | 0.83% | 4.05% | 9.26% | 24.96% | 4.08% | 36.28% | 48.27% | 38.26% | 0.00% | 3.89%
Non-financial companies -SME- Retail | 0.73% | 4.09% | 13.00% | 20.70% | 4.27% | 43.64% | 52.10% | 45.59% | 0.94% | 3.69%
Non-financial companies -Other | 0.05% | 0.25% | 0.00% | 0.00% | 0.25% | 50.00% | 0.00% | 50.00% | 0.00% | 0.08%
Other loans | 0.14% | 1.02% | 0.00% | 0.00% | 1.02% | 0.00% | 0.00% | 0.00% | 0.00% | 0.17%
Total | 0.34% | 2.80% | 7.53% | 13.74% | 3.05% | 37.02% | 60.13% | 45.81% | 28.94% | 2.43%

2022 REPORT & ACCOUNTS |

| 381
As at 31 December 2022, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by sector of activity and stage, are as follows:

(Thousands of euros)
| 2022
|  | Stage 2 | Stage 3 |  |
Sector of activity | Stage 1 | No delays | Days past due <= 30 days | Days past due > 30 days | Total | Days past due <= 90 days | Days past due > 90 days | Total | POCI | Total
Gross Exposure |  |  |  |  |  |  |  |  |  |
Loans to individuals | 32,827,885 | 3,279,338 | 270,182 | 132,752 | 3,682,272 | 536,732 | 427,303 | 964,035 | 30,146 | 37,504,338
Non-financial companies - Trade | 5,312,463 | 827,990 | 9,921 | 4,283 | 842,194 | 91,204 | 45,688 | 136,892 | 4,715 | 6,296,264
Non-financial companies - Construction | 2,010,021 | 771,490 | 3,040 | 1,033 | 775,563 | 363,418 | 32,791 | 396,209 | 1,851 | 3,183,644
Non-financial companies - Manufacturing industries | 5,836,145 | 1,013,888 | 9,380 | 4,983 | 1,028,251 | 162,228 | 117,804 | 280,032 | 928 | 7,145,356
Non-financial companies -Other activities | 2,107,745 | 395,981 | 3,587 | 1,007 | 400,575 | 101,252 | 17,354 | 118,606 | 44 | 2,626,970
Non-financial companies - Other services | 11,177,393 | 2,219,776 | 10,940 | 5,798 | 2,236,514 | 479,012 | 90,182 | 569,194 | 2,648 | 13,985,749
Other Services /Other activities | 15,382,103 | 423,148 | 100 | — | 423,248 | 72,980 | 1,524 | 74,504 | 7,545 | 15,887,400
Total | 74,653,755 | 8,931,611 | 307,150 | 149,856 | 9,388,617 | 1,806,826 | 732,646 | 2,539,472 | 47,877 | 86,629,721
Impairment |  |  |  |  | — |  |  | — |  | —
Loans to individuals | 67,939 | 54,944 | 22,759 | 16,486 | 94,189 | 160,627 | 237,356 | 397,983 | 17,888 | 577,999
Non-financial companies - Trade | 22,306 | 26,555 | 1,168 | 1,110 | 28,833 | 35,530 | 20,294 | 55,824 | 129 | 107,092
Non-financial companies - Construction | 11,517 | 16,055 | 551 | 288 | 16,894 | 154,391 | 18,769 | 173,160 | — | 201,571
Non-financial companies - Manufacturing industries | 54,925 | 54,821 | 1,293 | 1,258 | 57,372 | 65,474 | 58,761 | 124,235 | — | 236,532
Non-financial companies -Other activities | 7,701 | 15,667 | 529 | 154 | 16,350 | 44,356 | 8,459 | 52,815 | — | 76,866
Non-financial companies - Other services | 56,082 | 79,700 | 1,077 | 1,076 | 81,853 | 192,285 | 36,003 | 228,288 | — | 366,223
Other Services /Other activities | 19,578 | 4,561 | 9 | — | 4,570 | 36,543 | 1,254 | 37,797 | — | 61,945
Total | 240,048 | 252,303 | 27,386 | 20,372 | 300,061 | 689,206 | 380,896 | 1,070,102 | 18,017 | 1,628,228
Net exposure |  |  |  |  |  |  |  |  |  |
Loans to individuals | 32,759,946 | 3,224,394 | 247,423 | 116,266 | 3,588,083 | 376,105 | 189,947 | 566,052 | 12,258 | 36,926,339
Non-financial companies - Trade | 5,290,157 | 801,435 | 8,753 | 3,173 | 813,361 | 55,674 | 25,394 | 81,068 | 4,586 | 6,189,172
Non-financial companies - Construction | 1,998,504 | 755,435 | 2,489 | 745 | 758,669 | 209,027 | 14,022 | 223,049 | 1,851 | 2,982,073
Non-financial companies - Manufacturing industries | 5,781,220 | 959,067 | 8,087 | 3,725 | 970,879 | 96,754 | 59,043 | 155,797 | 928 | 6,908,824
Non-financial companies -Other activities | 2,100,044 | 380,314 | 3,058 | 853 | 384,225 | 56,896 | 8,895 | 65,791 | 44 | 2,550,104
Non-financial companies - Other services | 11,121,311 | 2,140,076 | 9,863 | 4,722 | 2,154,661 | 286,727 | 54,179 | 340,906 | 2,648 | 13,619,526
Other Services /Other activities | 15,362,525 | 418,587 | 91 | — | 418,678 | 36,437 | 270 | 36,707 | 7,545 | 15,825,455
Total | 74,413,707 | 8,679,308 | 279,764 | 129,484 | 9,088,556 | 1,117,620 | 351,750 | 1,469,370 | 29,860 | 85,001,493
% of impairment coverage |  |  |  |  |  |  |  |  |  |
Loans to individuals | 0.21% | 1.68% | 8.42% | 12.42% | 2.56% | 29.93% | 55.55% | 41.28% | 59.34% | 1.54%
Non-financial companies - Trade | 0.42% | 3.21% | 11.77% | 25.92% | 3.42% | 38.96% | 44.42% | 40.78% | 2.74% | 1.70%
Non-financial companies - Construction | 0.57% | 2.08% | 18.13% | 27.88% | 2.18% | 42.48% | 57.24% | 43.70% | 0.00% | 6.33%
Non-financial companies - Manufacturing industries | 0.94% | 5.41% | 13.78% | 25.25% | 5.58% | 40.36% | 49.88% | 44.36% | 0.00% | 3.31%
Non-financial companies -Other activities | 0.37% | 3.96% | 14.75% | 15.29% | 4.08% | 43.81% | 48.74% | 44.53% | 0.00% | 2.93%
Non-financial companies - Other services | 0.50% | 3.59% | 9.84% | 18.56% | 3.66% | 40.14% | 39.92% | 40.11% | 0.00% | 2.62%
Other Services /Other activities | 0.13% | 1.08% | 9.00% | 0.00% | 1.08% | 50.07% | 82.28% | 50.73% | 0.00% | 0.39%
Total | 0.32% | 2.82% | 8.92% | 13.59% | 3.20% | 38.14% | 51.99% | 42.14% | 37.63% | 1.88%

| 2022 REPORT & ACCOUNTS

382 |
As at 31 December 2021, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by sector of activity and stage, are as follows:

(Thousands of euros)
| 2021
|  | Stage 2 | Stage 3 |  |
Sector of activity | Stage 1 | No delays | Days past due <= 30 days | Days past due > 30 days | Total | Days past due <= 90 days | Days past due > 90 days | Total | POCI | Total
Gross Exposure |  |  |  |  |  |  |  |  |  |
Loans to individuals | 32,996,445 | 3,126,813 | 221,185 | 106,493 | 3,454,491 | 548,587 | 512,104 | 1,060,691 | 55,483 | 37,567,110
Non-financial companies - Trade | 5,498,200 | 868,334 | 4,967 | 3,001 | 876,302 | 91,994 | 57,333 | 149,327 | 99 | 6,523,928
Non-financial companies - Construction | 1,862,344 | 860,822 | 3,450 | 1,790 | 866,062 | 375,867 | 35,275 | 411,142 | 41 | 3,139,589
Non-financial companies - Manufacturing industries | 5,586,843 | 998,335 | 8,412 | 2,987 | 1,009,734 | 171,010 | 119,504 | 290,514 | 92 | 6,887,183
Non-financial companies - Other activities | 1,665,202 | 452,573 | 618 | 581 | 453,772 | 174,343 | 85,674 | 260,017 | 19 | 2,379,010
Non-financial companies - Other services | 10,270,262 | 2,730,590 | 9,622 | 6,695 | 2,746,907 | 444,737 | 308,839 | 753,576 | 1,979 | 13,772,724
Other Services /Other activities | 10,240,707 | 606,101 | 71 | 13 | 606,185 | 116,539 | 61,091 | 177,630 | — | 11,024,522
Total | 68,120,003 | 9,643,568 | 248,325 | 121,560 | 10,013,453 | 1,923,077 | 1,179,820 | 3,102,897 | 57,713 | 81,294,066
Impairment |  |  |  |  |  |  |  |  |  |
Loans to individuals | 58,219 | 35,760 | 15,546 | 13,467 | 64,773 | 152,455 | 299,389 | 451,844 | 16,689 | 591,525
Non-financial companies - Trade | 29,433 | 28,996 | 529 | 534 | 30,059 | 33,035 | 37,220 | 70,255 | — | 129,747
Non-financial companies - Construction | 11,855 | 14,740 | 634 | 389 | 15,763 | 127,891 | 22,655 | 150,546 | — | 178,164
Non-financial companies - Manufacturing industries | 33,038 | 30,564 | 473 | 725 | 31,762 | 49,030 | 53,649 | 102,679 | 12 | 167,491
Non-financial companies - Other activities | 9,548 | 17,393 | 123 | 120 | 17,636 | 87,138 | 41,142 | 128,280 | — | 155,464
Non-financial companies - Other services | 76,510 | 132,650 | 1,396 | 1,459 | 135,505 | 194,574 | 212,683 | 407,257 | 1 | 619,273
Other Services /Other activities | 14,888 | 9,746 | 4 | 3 | 9,753 | 67,871 | 42,746 | 110,617 | — | 135,258
Total | 233,491 | 269,849 | 18,705 | 16,697 | 305,251 | 711,994 | 709,484 | 1,421,478 | 16,702 | 1,976,922
Net exposure |  |  |  |  |  |  |  |  |  |
Loans to individuals | 32,938,226 | 3,091,053 | 205,639 | 93,026 | 3,389,718 | 396,132 | 212,715 | 608,847 | 38,794 | 36,975,585
Non-financial companies - Trade | 5,468,767 | 839,338 | 4,438 | 2,467 | 846,243 | 58,959 | 20,113 | 79,072 | 99 | 6,394,181
Non-financial companies - Construction | 1,850,489 | 846,082 | 2,816 | 1,401 | 850,299 | 247,976 | 12,620 | 260,596 | 41 | 2,961,425
Non-financial companies - Manufacturing industries | 5,553,805 | 967,771 | 7,939 | 2,262 | 977,972 | 121,980 | 65,855 | 187,835 | 80 | 6,719,692
Non-financial companies - Other activities | 1,655,654 | 435,180 | 495 | 461 | 436,136 | 87,205 | 44,532 | 131,737 | 19 | 2,223,546
Non-financial companies - Other services | 10,193,752 | 2,597,940 | 8,226 | 5,236 | 2,611,402 | 250,163 | 96,156 | 346,319 | 1,978 | 13,153,451
Other Services /Other activities | 10,225,819 | 596,355 | 67 | 10 | 596,432 | 48,668 | 18,345 | 67,013 | — | 10,889,264
Total | 67,886,512 | 9,373,719 | 229,620 | 104,863 | 9,708,202 | 1,211,083 | 470,336 | 1,681,419 | 41,011 | 79,317,144
% of impairment coverage |  |  |  |  |  |  |  |  |  |
Loans to individuals | 0.18% | 1.14% | 7.03% | 12.65% | 1.88% | 27.79% | 58.46% | 42.60% | 30.08% | 1.57%
Non-financial companies - Trade | 0.54% | 3.34% | 10.65% | 17.79% | 3.43% | 35.91% | 64.92% | 47.05% | 0.00% | 1.99%
Non-financial companies - Construction | 0.64% | 1.71% | 18.38% | 21.73% | 1.82% | 34.03% | 64.22% | 36.62% | 0.00% | 5.67%
Non-financial companies - Manufacturing industries | 0.59% | 3.06% | 5.62% | 24.27% | 3.15% | 28.67% | 44.89% | 35.34% | 13.04% | 2.43%
Non-financial companies - Other activities | 0.57% | 3.84% | 19.90% | 20.65% | 3.89% | 49.98% | 48.02% | 49.34% | 0.00% | 6.53%
Non-financial companies - Other services | 0.74% | 4.86% | 14.51% | 21.79% | 4.93% | 43.75% | 68.87% | 54.04% | 0.05% | 4.50%
Other Services /Other activities | 0.15% | 1.61% | 5.63% | 23.08% | 1.61% | 58.24% | 69.97% | 62.27% | 0.00% | 1.23%
Total | 0.34% | 2.80% | 7.53% | 13.74% | 3.05% | 37.02% | 60.13% | 45.81% | 28.94% | 2.43%

2022 REPORT & ACCOUNTS |

| 383
As at 31 December 2022, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by geography and stage, are as follows:

(Thousands of euros)
| 2022
|  | Stage 2 | Stage 3 |  |
Geography | Stage 1 | No delays | Days past due <= 30 days | Days past due > 30 days | Total | Days past due <= 90 days | Days past due > 90 days | Total | POCI | Total
Gross Exposure |  |  |  |  |  |  |  |  |  |
Portugal | 54,604,642 | 7,155,127 | 159,209 | 66,646 | 7,380,982 | 1,410,285 | 306,213 | 1,716,498 | 19,011 | 63,721,133
Poland | 18,184,099 | 1,377,667 | 142,519 | 81,498 | 1,601,684 | 386,990 | 343,753 | 730,743 | 28,866 | 20,545,392
Mozambique | 1,865,014 | 398,817 | 5,422 | 1,712 | 405,951 | 9,551 | 82,680 | 92,231 | — | 2,363,196
Total | 74,653,755 | 8,931,611 | 307,150 | 149,856 | 9,388,617 | 1,806,826 | 732,646 | 2,539,472 | 47,877 | 86,629,721
Impairment |  |  |  |  |  |  |  |  |  |
Portugal | 150,039 | 205,954 | 7,124 | 5,447 | 218,525 | 550,372 | 124,012 | 674,384 | — | 1,042,948
Poland | 83,818 | 42,151 | 19,641 | 14,566 | 76,358 | 136,847 | 210,573 | 347,420 | 18,017 | 525,613
Mozambique | 6,191 | 4,198 | 621 | 359 | 5,178 | 1,987 | 46,311 | 48,298 | — | 59,667
Total | 240,048 | 252,303 | 27,386 | 20,372 | 300,061 | 689,206 | 380,896 | 1,070,102 | 18,017 | 1,628,228
Net exposure |  |  |  |  |  |  |  |  |  |
Portugal | 54,454,603 | 6,949,173 | 152,085 | 61,199 | 7,162,457 | 859,913 | 182,201 | 1,042,114 | 19,011 | 62,678,185
Poland | 18,100,281 | 1,335,516 | 122,878 | 66,932 | 1,525,326 | 250,143 | 133,180 | 383,323 | 10,849 | 20,019,779
Mozambique | 1,858,823 | 394,619 | 4,801 | 1,353 | 400,773 | 7,564 | 36,369 | 43,933 | — | 2,303,529
Total | 74,413,707 | 8,679,308 | 279,764 | 129,484 | 9,088,556 | 1,117,620 | 351,750 | 1,469,370 | 29,860 | 85,001,493
% of impairment coverage |  |  |  |  |  |  |  |  |  |
Portugal | 0.27% | 2.88% | 4.47% | 8.17% | 2.96% | 39.03% | 40.50% | 39.29% | 0.00% | 1.64%
Poland | 0.46% | 3.06% | 13.78% | 17.87% | 4.77% | 35.36% | 61.26% | 47.54% | 62.42% | 2.56%
Mozambique | 0.33% | 1.05% | 11.45% | 20.97% | 1.28% | 20.80% | 56.01% | 52.37% | 0.00% | 2.52%
Total | 0.32% | 2.82% | 8.92% | 13.59% | 3.20% | 38.14% | 51.99% | 42.14% | 37.63% | 1.88%

As at 31 December 2021, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by geography and stage, are as follows:

(Thousands of euros)
| 2021
|  | Stage 2 | Stage 3 |  |
Geography | Stage 1 | No delays | Days past due <= 30 days | Days past due > 30 days | Total | Days past due <= 90 days | Days past due > 90 days | Total | POCI | Total
Gross Exposure |  |  |  |  |  |  |  |  |  |
Portugal | 47,317,940 | 8,493,201 | 146,320 | 67,733 | 8,707,254 | 1,547,559 | 728,443 | 2,276,002 | 5,300 | 58,306,496
Poland | 19,103,628 | 769,723 | 99,516 | 51,793 | 921,032 | 365,537 | 361,411 | 726,948 | 52,413 | 20,804,021
Mozambique | 1,698,435 | 380,644 | 2,489 | 2,034 | 385,167 | 9,981 | 89,966 | 99,947 | — | 2,183,549
Total | 68,120,003 | 9,643,568 | 248,325 | 121,560 | 10,013,453 | 1,923,077 | 1,179,820 | 3,102,897 | 57,713 | 81,294,066
Impairment |  |  |  |  |  |  |  |  |  |
Portugal | 147,634 | 236,865 | 4,407 | 4,193 | 245,465 | 581,622 | 418,597 | 1,000,219 | — | 1,393,318
Poland | 79,484 | 29,130 | 13,962 | 12,071 | 55,163 | 127,416 | 248,916 | 376,332 | 16,702 | 527,681
Mozambique | 6,373 | 3,854 | 336 | 433 | 4,623 | 2,956 | 41,971 | 44,927 | — | 55,923
Total | 233,491 | 269,849 | 18,705 | 16,697 | 305,251 | 711,994 | 709,484 | 1,421,478 | 16,702 | 1,976,922
Net exposure |  |  |  |  |  |  |  |  |  |
Portugal | 47,170,306 | 8,256,336 | 141,913 | 63,540 | 8,461,789 | 965,937 | 309,846 | 1,275,783 | 5,300 | 56,913,178
Poland | 19,024,144 | 740,593 | 85,554 | 39,722 | 865,869 | 238,121 | 112,495 | 350,616 | 35,711 | 20,276,340
Mozambique | 1,692,062 | 376,790 | 2,153 | 1,601 | 380,544 | 7,025 | 47,995 | 55,020 | — | 2,127,626
Total | 67,886,512 | 9,373,719 | 229,620 | 104,863 | 9,708,202 | 1,211,083 | 470,336 | 1,681,419 | 41,011 | 79,317,144
% of impairment coverage |  |  |  |  |  |  |  |  |  |
Portugal | 0.31% | 2.79% | 3.01% | 6.19% | 2.82% | 37.58% | 57.46% | 43.95% | 0.00% | 2.39%
Poland | 0.42% | 3.78% | 14.03% | 23.31% | 5.99% | 34.86% | 68.87% | 51.77% | 31.87% | 2.54%
Mozambique | 0.38% | 1.01% | 13.50% | 21.29% | 1.20% | 29.62% | 46.65% | 44.95% | 0.00% | 2.56%
Total | 0.34% | 2.80% | 7.53% | 13.74% | 3.05% | 37.02% | 60.13% | 45.81% | 28.94% | 2.43%

| 2022 REPORT & ACCOUNTS

384 |
As at 31 December 2022, the gross exposure, by type of financial instrument, internal rating and stage, is analysed as
follows:

(Thousands of euros)
| 2022
| Gross Exposure |  |
| Higher quality (GR 1-6) | Average quality (GR 7-9) | Lower quality (GR 10-12) | Procedural (GR 13/14/15) | Not classified (without risk grade) | Total | Impairment losses | Net exposure
Financial assets at amortised cost |  |  |  |  |  |  |  |
stage 1 | 44,625,339 | 10,468,892 | 3,984,622 | 2,862 | 1,268,808 | 60,350,523 | 228,741 | 60,121,782
stage 2 | 1,456,028 | 1,911,502 | 3,321,694 | 373,651 | 557,148 | 7,620,023 | 285,168 | 7,334,855
stage 3 | — | — | — | 2,165,309 | 9,472 | 2,174,781 | 985,667 | 1,189,114
POCI | 1,928 | 9,048 | 1,122 | 34,782 | 77 | 46,957 | 17,898 | 29,059
| 46,083,295 | 12,389,442 | 7,307,438 | 2,576,604 | 1,835,505 | 70,192,284 | 1,517,474 | 68,674,810
Debt instruments at fair value through other comprehensive income (*) |  |  |  |  |  |  |  |
stage 1 | 6,600,955 | 169,240 | 34,790 | — | 629,167 | 7,434,152 | — | 7,434,152
stage 3 | — | — | — | — | 1,067 | 1,067 | 1,067 | —
| 6,600,955 | 169,240 | 34,790 | — | 630,234 | 7,435,219 | 1,067 | 7,434,152
Guarantees and other commitments (**) |  |  |  |  |  |  |  |
stage 1 | 9,105,641 | 3,673,579 | 1,312,038 | 57 | 211,917 | 14,303,232 | 11,307 | 14,291,925
stage 2 | 219,327 | 390,858 | 832,431 | 34,840 | 291,138 | 1,768,594 | 14,893 | 1,753,701
stage 3 | — | — | — | 364,627 | 64 | 364,691 | 84,435 | 280,256
POCI | — | — | — | 921 | — | 921 | 119 | 802
| 9,324,968 | 4,064,437 | 2,144,469 | 400,445 | 503,119 | 16,437,438 | 110,754 | 16,326,684
Total | 62,009,218 | 16,623,119 | 9,486,697 | 2,977,049 | 2,968,858 | 94,064,941 | 1,629,295 | 92,435,646

(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements indicated in the
accounting policy 1 C1.5.1.2.
(**) The gross exposure includes the guarantees granted, irrevocable credit lines and revocable commitments (note 45).
As at 31 December 2021, the gross exposure, by type of financial instrument, internal rating and stage, is analysed as
follows:

(Thousands of euros)
| 2021
| Gross Exposure |  |
| Higher quality (GR 1-6) | Average quality (GR 7-9) | Lower quality (GR 10-12) | Procedural (GR 13/14/15) | Not classified (without risk grade) | Total | Impairment losses | Net exposure
Financial assets at amortised cost |  |  |  |  |  |  |  |
stage 1 | 39,440,489 | 10,218,369 | 3,686,807 | 6,197 | 1,305,368 | 54,657,230 | 220,643 | 54,436,587
stage 2 | 1,650,754 | 1,832,802 | 3,828,897 | 284,265 | 494,703 | 8,091,421 | 292,219 | 7,799,202
stage 3 | — | — | — | 2,690,023 | 695 | 2,690,718 | 1,336,710 | 1,354,008
POCI | 3,001 | 2,535 | 1,096 | 51,081 | 1 | 57,714 | 16,702 | 41,012
| 41,094,244 | 12,053,706 | 7,516,800 | 3,031,566 | 1,800,767 | 65,497,083 | 1,866,274 | 63,630,809
Debt instruments at fair value through other comprehensive income (*) |  |  |  |  |  |  |  |
stage 1 | 12,357,161 | 249,054 | 29,162 | — | 220,790 | 12,856,167 | — | 12,856,167
stage 3 | — | — | — | — | 1,092 | 1,092 | 1,092 | —
| 12,357,161 | 249,054 | 29,162 | — | 221,882 | 12,857,259 | 1,092 | 12,856,167
Guarantees and other commitments (**) |  |  |  |  |  |  |  |
stage 1 | 8,383,240 | 3,632,450 | 1,183,525 | 192 | 263,366 | 13,462,773 | 12,848 | 13,449,925
stage 2 | 197,624 | 509,335 | 919,049 | 42,849 | 253,175 | 1,922,032 | 13,032 | 1,909,000
stage 3 | — | — | — | 412,179 | — | 412,179 | 84,768 | 327,411
| 8,580,864 | 4,141,785 | 2,102,574 | 455,220 | 516,541 | 15,796,984 | 110,648 | 15,686,336
Total | 62,032,269 | 16,444,545 | 9,648,536 | 3,486,786 | 2,539,190 | 94,151,326 | 1,978,014 | 92,173,312

(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements indicated in the
accounting policy 1 C1.5.1.2.
(**) The gross exposure includes the guarantees granted, irrevocable credit lines and revocable commitments (note 45).

2022 REPORT & ACCOUNTS |

| 385
As at 31 December 2022, the financial assets at amortised cost, guarantees granted, irrevocable credit lines and
revocable commitments subject to individual and collective impairment, by segment, are presented in the following
table:

(Thousands of euros)
| 2022
| Gross Exposure | Impairment losses
Segment | Individual | Collective | Total | Individual | Collective | Total
Individuals - Mortgage | 30,700 | 28,183,186 | 28,213,886 | 9,386 | 157,417 | 166,803
Individuals - Other | 26,953 | 9,263,499 | 9,290,452 | 18,543 | 392,653 | 411,196
Financial Companies | 81,059 | 3,651,532 | 3,732,591 | 37,622 | 10,362 | 47,984
Non-financial companies - Corporate | 276,046 | 10,343,093 | 10,619,139 | 126,378 | 49,889 | 176,267
Non-financial companies - SME - Corporate | 654,073 | 13,253,883 | 13,907,956 | 301,952 | 172,651 | 474,603
Non-financial companies -SME - Retail | 158,552 | 7,946,796 | 8,105,348 | 94,878 | 241,890 | 336,768
Non-financial companies - Other | — | 605,540 | 605,540 | — | 646 | 646
Other loans | — | 12,154,809 | 12,154,809 | — | 13,961 | 13,961
Total | 1,227,383 | 85,402,338 | 86,629,721 | 588,759 | 1,039,469 | 1,628,228

As at 31 December 2021, the financial assets at amortised cost, guarantees granted, irrevocable credit lines and
revocable commitments subject to individual and collective impairment, by segment, are presented in the following
table

(Thousands of euros)
| 2021
| Gross Exposure | Impairment losses
Segment | Individual | Collective | Total | Individual | Collective | Total
Individuals - Mortgage | 46,604 | 28,299,223 | 28,345,827 | 14,081 | 135,397 | 149,478
Individuals - Other | 30,802 | 9,190,481 | 9,221,283 | 18,753 | 423,294 | 442,047
Financial Companies | 171,875 | 3,286,626 | 3,458,501 | 110,524 | 12,056 | 122,580
Non-financial companies - Corporate | 520,987 | 8,970,067 | 9,491,054 | 325,523 | 63,206 | 388,729
Non-financial companies - SME - Corporate | 650,958 | 12,985,257 | 13,636,215 | 290,432 | 240,161 | 530,593
Non-financial companies -SME - Retail | 248,059 | 8,702,126 | 8,950,185 | 127,132 | 203,176 | 330,308
Non-financial companies - Other | 152 | 624,828 | 624,980 | 76 | 433 | 509
Other loans | — | 7,566,021 | 7,566,021 | — | 12,678 | 12,678
Total | 1,669,437 | 79,624,629 | 81,294,066 | 886,521 | 1,090,401 | 1,976,922

As at 31 December 2022, the financial assets at amortised cost, guarantees granted, irrevocable credit lines and
revocable commitments subject to individual and collective impairment, by sector of activity are presented in the
following table:

(Thousands of euros)
| 2022
| Gross Exposure | Impairment losses
Sector of activity | Individual | Collective | Total | Individual | Collective | Total
Loans to individuals | 57,653 | 37,446,685 | 37,504,338 | 27,929 | 550,070 | 577,999
Non-financial companies - Trade | 56,649 | 6,239,615 | 6,296,264 | 30,640 | 76,452 | 107,092
Non-financial companies - Construction | 308,289 | 2,875,355 | 3,183,644 | 158,454 | 43,117 | 201,571
Non-financial companies - Manufacturing industry | 173,248 | 6,972,108 | 7,145,356 | 93,885 | 142,647 | 236,532
Non-financial companies - Other activities | 95,832 | 2,531,138 | 2,626,970 | 44,541 | 32,325 | 76,866
Non-financial companies - Other services | 454,653 | 13,531,096 | 13,985,749 | 195,688 | 170,535 | 366,223
Other Services /Other activities | 81,059 | 15,806,341 | 15,887,400 | 37,622 | 24,323 | 61,945
Total | 1,227,383 | 85,402,338 | 86,629,721 | 588,759 | 1,039,469 | 1,628,228

| 2022 REPORT & ACCOUNTS

386 |
As at 31 December 2021, the financial assets at amortised cost, guarantees granted, irrevocable credit lines and
revocable commitments subject to individual and collective impairment, by sector of activity are presented in the
following table: tables:

(Thousands of euros)
| 2021
| Gross Exposure | Impairment losses
Sector of activity | Individual | Collective | Total | Individual | Collective | Total
Loans to individuals | 77,406 | 37,489,704 | 37,567,110 | 32,834 | 558,691 | 591,525
Non-financial companies - Trade | 62,335 | 6,461,593 | 6,523,928 | 39,934 | 89,813 | 129,747
Non-financial companies - Construction | 295,885 | 2,843,704 | 3,139,589 | 129,735 | 48,429 | 178,164
Non-financial companies - Manufacturing industry | 204,562 | 6,682,621 | 6,887,183 | 81,987 | 85,504 | 167,491
Non-financial companies - Other activities | 234,767 | 2,144,243 | 2,379,010 | 120,809 | 34,655 | 155,464
Non-financial companies - Other services | 622,607 | 13,150,117 | 13,772,724 | 370,698 | 248,575 | 619,273
Other Services /Other activities | 171,875 | 10,852,647 | 11,024,522 | 110,524 | 24,734 | 135,258
Total | 1,669,437 | 79,624,629 | 81,294,066 | 886,521 | 1,090,401 | 1,976,922

As at 31 December 2022, the financial assets at amortised cost, guarantees granted, irrevocable credit lines and
revocable commitments subject to individual and collective impairment, by geography, are presented in the following
table:

(Thousands of euros)
| 2022
| Gross Exposure | Impairment losses
Geography | Individual | Collective | Total | Individual | Collective | Total
Portugal | 1,053,955 | 62,667,178 | 63,721,133 | 511,657 | 531,291 | 1,042,948
Poland | 98,717 | 20,446,675 | 20,545,392 | 37,219 | 488,394 | 525,613
Mozambique | 74,711 | 2,288,485 | 2,363,196 | 39,883 | 19,784 | 59,667
Total | 1,227,383 | 85,402,338 | 86,629,721 | 588,759 | 1,039,469 | 1,628,228

As at 31 December 2021, the financial assets at amortised cost, guarantees granted, irrevocable credit lines and
revocable commitments subject to individual and collective impairment, by geography, are presented in the following
table:

(Thousands of euros)
| 2021
| Gross Exposure | Impairment losses
Geography | Individual | Collective | Total | Individual | Collective | Total
Portugal | 1,419,193 | 56,887,303 | 58,306,496 | 791,108 | 602,210 | 1,393,318
Poland | 168,126 | 20,635,895 | 20,804,021 | 57,127 | 470,554 | 527,681
Mozambique | 82,118 | 2,101,431 | 2,183,549 | 38,286 | 17,637 | 55,923
Total | 1,669,437 | 79,624,629 | 81,294,066 | 886,521 | 1,090,401 | 1,976,922

The columns Gross exposure and Collective impairment losses of the previous tables include loans subject to individual
analysis for which the Group has concluded that there is no objective evidence of impairment.

2022 REPORT & ACCOUNTS |

| 387
As at 31 December 2022, the following table includes the loans portfolio by segment and by year of production (date of
the beginning of the operations, in the portfolio at the date of balance sheet - it does not include restructured loans):

| 2022
Year of production | Construction and Commercial Real Estate | Companies - Other Activities | Mortgage loans | Individuals - Other | Other loans | Total
2012 and previous |  |  |  |  |  |
Number of operations | 15,703 | 25,791 | 293,344 | 677,001 | 384 | 1,012,223
Value (Euros '000) | 970,246 | 3,194,423 | 10,117,624 | 1,228,014 | 81,780 | 15,592,087
Impairment constituted (Euros '000) | 73,617 | 51,428 | 106,931 | 17,378 | 646 | 250,000
2013 |  |  |  |  |  |
Number of operations | 1,121 | 3,600 | 10,115 | 65,523 | 17 | 80,376
Value (Euros '000) | 64,192 | 510,025 | 376,049 | 106,759 | 2,537 | 1,059,562
Impairment constituted (Euros '000) | 3,236 | 3,441 | 5,681 | 3,329 | 6 | 15,693
2014 |  |  |  |  |  |
Number of operations | 1,234 | 4,859 | 8,737 | 82,035 | 86 | 96,951
Value (Euros '000) | 76,217 | 509,250 | 356,743 | 126,516 | 183,780 | 1,252,506
Impairment constituted (Euros '000) | 5,049 | 9,235 | 4,719 | 4,618 | 855 | 24,476
2015 |  |  |  |  |  |
Number of operations | 1,691 | 6,284 | 10,836 | 112,676 | 124 | 131,611
Value (Euros '000) | 106,007 | 908,354 | 515,361 | 185,482 | 44,947 | 1,760,151
Impairment constituted (Euros '000) | 1,947 | 23,398 | 3,874 | 9,116 | 27,758 | 66,093
2016 |  |  |  |  |  |
Number of operations | 1,911 | 8,196 | 12,280 | 134,403 | 55 | 156,845
Value (Euros '000) | 154,183 | 1,209,277 | 616,181 | 256,858 | 4,248 | 2,240,747
Impairment constituted (Euros '000) | 5,274 | 13,961 | 4,432 | 17,195 | 174 | 41,036
2017 |  |  |  |  |  |
Number of operations | 2,568 | 11,100 | 20,277 | 142,014 | 96 | 176,055
Value (Euros '000) | 219,318 | 1,228,140 | 1,202,742 | 305,913 | 13,230 | 2,969,343
Impairment constituted (Euros '000) | 2,807 | 17,900 | 5,830 | 21,347 | 720 | 48,604
2018 |  |  |  |  |  |
Number of operations | 5,312 | 19,488 | 26,701 | 286,638 | 203 | 338,342
Value (Euros '000) | 498,338 | 2,227,925 | 1,833,809 | 655,719 | 309,885 | 5,525,676
Impairment constituted (Euros '000) | 7,262 | 32,931 | 6,511 | 43,836 | 1,607 | 92,147
2019 |  |  |  |  |  |
Number of operations | 8,703 | 27,962 | 30,166 | 595,430 | 185 | 662,446
Value (Euros '000) | 632,970 | 2,098,246 | 2,198,981 | 1,221,662 | 144,135 | 6,295,994
Impairment constituted (Euros '000) | 7,295 | 45,754 | 5,735 | 75,179 | 3,002 | 136,965
2020 |  |  |  |  |  |
Number of operations | 9,891 | 37,416 | 36,088 | 313,758 | 255 | 397,408
Value (Euros '000) | 1,148,968 | 4,324,442 | 2,656,294 | 809,745 | 165,228 | 9,104,677
Impairment constituted (Euros '000) | 13,228 | 83,686 | 7,361 | 42,424 | 1,638 | 148,337
2021 |  |  |  |  |  |
Number of operations | 10,744 | 37,545 | 53,486 | 524,347 | 340 | 626,462
Value (Euros '000) | 1,146,704 | 3,355,457 | 4,464,436 | 1,376,201 | 388,696 | 10,731,494
Impairment constituted (Euros '000) | 15,760 | 51,953 | 8,848 | 61,243 | 2,299 | 140,103
2022 |  |  |  |  |  |
Number of operations | 14,046 | 117,544 | 38,354 | 1,108,878 | 4,678 | 1,283,500
Value (Euros '000) | 2,097,778 | 7,566,584 | 3,822,846 | 2,514,949 | 364,556 | 16,366,713
Impairment constituted (Euros '000) | 19,365 | 169,939 | 5,788 | 64,160 | 2,593 | 261,845
Total |  |  |  |  |  |
Number of operations | 72,924 | 299,785 | 540,384 | 4,042,703 | 6,423 | 4,962,219
Value (Euros '000) | 7,114,921 | 27,132,123 | 28,161,066 | 8,787,818 | 1,703,022 | 72,898,950
Impairment constituted (Euros '000) | 154,840 | 503,626 | 165,710 | 359,825 | 41,298 | 1,225,299

In the year of the current production, are included operations that, by their nature, are contractually subject to
renewals. In these cases, the date of the last renewal is considered, namely for overdraft operations, secured current
account and factoring operations.

| 2022 REPORT & ACCOUNTS

388 |
As at 31 December 2021, the following table includes the loans portfolio by segment and by year of production (date of
the beginning of the operations, in the portfolio at the date of balance sheet - it does not include restructured loans):

| 2021
Year of production | Construction and Commercial Real Estate | Companies - Other Activities | Mortgage loans | Individuals - Other | Other loans | Total
2011 and previous |  |  |  |  |  |
Number of operations | 16,443 | 27,013 | 312,064 | 707,279 | 493 | 1,063,292
Value (Euros '000) | 988,051 | 3,546,686 | 11,518,139 | 1,202,309 | 96,963 | 17,352,148
Impairment constituted (Euros '000) | 74,609 | 59,229 | 112,005 | 25,236 | 824 | 271,903
2012 |  |  |  |  |  |
Number of operations | 1,184 | 3,463 | 11,387 | 103,094 | 184 | 119,312
Value (Euros '000) | 80,315 | 213,802 | 401,586 | 144,851 | 10,158 | 850,712
Impairment constituted (Euros '000) | 3,837 | 5,324 | 4,751 | 4,355 | 35 | 18,302
2013 |  |  |  |  |  |
Number of operations | 1,641 | 4,653 | 11,229 | 107,983 | 33 | 125,539
Value (Euros '000) | 81,722 | 576,793 | 442,501 | 136,479 | 8,762 | 1,246,257
Impairment constituted (Euros '000) | 4,471 | 8,084 | 5,580 | 5,122 | 5,108 | 28,365
2014 |  |  |  |  |  |
Number of operations | 1,641 | 6,271 | 9,805 | 116,968 | 95 | 134,780
Value (Euros '000) | 105,894 | 645,718 | 422,736 | 166,061 | 190,746 | 1,531,155
Impairment constituted (Euros '000) | 3,970 | 20,745 | 4,348 | 7,486 | 2,191 | 38,740
2015 |  |  |  |  |  |
Number of operations | 2,289 | 8,314 | 12,051 | 161,566 | 135 | 184,355
Value (Euros '000) | 118,689 | 964,423 | 598,334 | 241,761 | 42,217 | 1,965,424
Impairment constituted (Euros '000) | 2,824 | 28,579 | 3,728 | 16,198 | 19,417 | 70,746
2016 |  |  |  |  |  |
Number of operations | 2,669 | 11,649 | 13,803 | 182,204 | 76 | 210,401
Value (Euros '000) | 163,829 | 1,478,862 | 722,220 | 354,356 | 4,193 | 2,723,460
Impairment constituted (Euros '000) | 6,010 | 38,956 | 3,929 | 28,921 | 200 | 78,016
2017 |  |  |  |  |  |
Number of operations | 3,601 | 16,424 | 22,504 | 206,982 | 135 | 249,646
Value (Euros '000) | 277,439 | 1,670,775 | 1,398,081 | 429,457 | 18,044 | 3,793,796
Impairment constituted (Euros '000) | 5,095 | 23,129 | 4,472 | 35,979 | 680 | 69,355
2018 |  |  |  |  |  |
Number of operations | 6,750 | 28,128 | 29,336 | 361,525 | 252 | 425,991
Value (Euros '000) | 765,450 | 2,700,168 | 2,109,180 | 893,124 | 334,778 | 6,802,700
Impairment constituted (Euros '000) | 10,003 | 53,212 | 4,375 | 66,397 | 1,688 | 135,675
2019 |  |  |  |  |  |
Number of operations | 10,349 | 35,279 | 33,145 | 703,461 | 255 | 782,489
Value (Euros '000) | 916,637 | 2,723,462 | 2,540,307 | 1,582,002 | 181,729 | 7,944,137
Impairment constituted (Euros '000) | 9,757 | 69,372 | 2,964 | 95,816 | 2,883 | 180,792
2020 |  |  |  |  |  |
Number of operations | 11,226 | 42,426 | 39,282 | 450,557 | 362 | 543,853
Value (Euros '000) | 1,671,233 | 5,360,650 | 3,082,954 | 1,138,368 | 268,429 | 11,521,634
Impairment constituted (Euros '000) | 19,037 | 87,662 | 4,534 | 44,968 | 2,008 | 158,209
2021 |  |  |  |  |  |
Number of operations | 14,097 | 107,313 | 56,969 | 994,034 | 5,019 | 1,177,432
Value (Euros '000) | 1,729,149 | 6,506,623 | 5,006,493 | 2,353,761 | 513,072 | 16,109,098
Impairment constituted (Euros '000) | 17,888 | 88,776 | 7,652 | 35,963 | 2,954 | 153,233
Total |  |  |  |  |  |
Number of operations | 71,890 | 290,933 | 551,575 | 4,095,653 | 7,039 | 5,017,090
Value (Euros '000) | 6,898,408 | 26,387,962 | 28,242,531 | 8,642,529 | 1,669,091 | 71,840,521
Impairment constituted (Euros '000) | 157,501 | 483,068 | 158,338 | 366,441 | 37,988 | 1,203,336

2022 REPORT & ACCOUNTS |

| 389
In the year of the current production, are included operations that, by their nature, are contractually subject to
renewals. In these cases, the date of the last renewal is considered, namely for overdraft operations, secured current
account and factoring operations.
As at 31 December 2022, t he following table includes the fair value of the collaterals by segments (not limited by the
value of the collateral) associated to the loan's portfolio:

| 2022
| Construction and Commercial Real Estate | Companies - Other Activities | Mortgage loans
Fair Value | Real Estate (*) | Other real Collateral (**) | Real Estate (*) | Other real Collateral (**) | Real Estate (*) | Other real Collateral (**)
< 0.5 M€ |  |  |  |  |  |
Number | 6,822 | 9,575 | 9,030 | 71,315 | 468,372 | 303
Value (Euros '000) | 882,242 | 223,661 | 1,369,613 | 1,489,242 | 62,924,078 | 17,038
>= 0.5 M€ and < 1 M€ |  |  |  |  |  |
Number | 741 | 70 | 1,189 | 236 | 6,321 | 4
Value (Euros '000) | 520,105 | 47,186 | 832,819 | 162,741 | 4,080,818 | 2,230
>= 1 M€ and < 5 M€ |  |  |  |  |  |
Number | 634 | 47 | 1,110 | 205 | 1,062 | 1
Value (Euros '000) | 1,307,513 | 84,190 | 2,223,387 | 395,940 | 1,636,182 | 1,267
>= 5 M€ and < 10 M€ |  |  |  |  |  |
Number | 108 | 2 | 118 | 15 | 14 | —
Value (Euros '000) | 737,705 | 10,838 | 852,256 | 102,251 | 86,476 | —
>= 10 M€ and < 20 M€ |  |  |  |  |  |
Number | 50 | 2 | 57 | 13 | 1 | —
Value (Euros '000) | 651,146 | 21,833 | 809,825 | 194,916 | 11,110 | —
>= 20 M€ and < 50 M€ |  |  |  |  |  |
Number | 22 | — | 40 | 1 | — | —
Value (Euros '000) | 636,352 | — | 1,208,432 | 20,452 | — | —
>= 50 M€ |  |  |  |  |  |
Number | 6 | — | 14 | 2 | — | —
Value (Euros '000) | 455,600 | — | 1,245,381 | 523,630 | — | —
Total Number | 8,383 | 9,696 | 11,558 | 71,787 | 475,770 | 308
Total Value (Euros '000) | 5,190,663 | 387,708 | 8,541,713 | 2,889,172 | 68,738,664 | 20,535

(*) The fair value of real estate collateral relates to the PVT included in valuations.
(**) Includes, namely, securities, deposits and fixed assets pledges.

| 2022 REPORT & ACCOUNTS

390 |
As at 31 December 2021, the following table includes the fair value of the collaterals by segments (not limited by the
value of the collateral) associated to the loan's portfolio:

| 2021
| Construction and Commercial Real Estate | Companies - Other Activities | Mortgage loans
Fair Value | Real Estate (*) | Other real Collateral (**) | Real Estate (*) | Other real Collateral (**) | Real Estate (*) | Other real Collateral (**)
< 0.5 M€ |  |  |  |  |  |
Number | 6,479 | 10,273 | 9,346 | 74,677 | 476,204 | 321
Value (Euros '000) | 868,524 | 238,345 | 1,412,766 | 1,495,825 | 60,342,081 | 17,349
>= 0.5 M€ and < 1 M€ |  |  |  |  |  |
Number | 763 | 63 | 1,231 | 249 | 5,567 | 6
Value (Euros '000) | 522,827 | 40,591 | 858,038 | 170,352 | 3,594,194 | 3,534
>= 1 M€ and < 5 M€ |  |  |  |  |  |
Number | 550 | 57 | 1,092 | 207 | 883 | 1
Value (Euros '000) | 1,125,581 | 105,005 | 2,173,966 | 388,273 | 1,337,278 | 1,474
>= 5 M€ and < 10 M€ |  |  |  |  |  |
Number | 100 | 3 | 119 | 20 | 10 | —
Value (Euros '000) | 696,758 | 16,515 | 844,212 | 134,534 | 63,256 | —
>= 10 M€ and < 20 M€ |  |  |  |  |  |
Number | 44 | 3 | 51 | 15 | 1 | —
Value (Euros '000) | 595,828 | 40,128 | 687,338 | 224,766 | 11,047 | —
>= 20 M€ and < 50 M€ |  |  |  |  |  |
Number | 33 | — | 35 | 1 | — | —
Value (Euros '000) | 958,264 | — | 1,032,578 | 49,281 | — | —
>= 50 M€ |  |  |  |  |  |
Number | 4 | — | 13 | 3 | — | —
Value (Euros '000) | 260,929 | — | 1,108,030 | 827,069 | — | —
Total Number | 7,973 | 10,399 | 11,887 | 75,172 | 482,665 | 328
Total Value (Euros '000) | 5,028,711 | 440,584 | 8,116,928 | 3,290,100 | 65,347,856 | 22,357

(*) The fair value of real estate collateral relates to the PVT included in valuations.
(**) Includes, namely, securities, deposits and fixed assets pledges.

2022 REPORT & ACCOUNTS |

| 391
As at 31 December 2022, the following table includes the LTV (loan-to-value) ratio by segments Construction and
Commercial Real Estate (CRE), Companies - Other Activities and Mortgage loans:

|  |  |  | (Thousands of euros)
| 2022
Segment/Ratio | Number of properties | Stage 1 | Stage 2 | Stage 3 | Impairment
Construction and CRE |  |  |  |  |
Without associated collateral | n.a. | 1,528,695 | 453,957 | 73,399 | 70,799
<60% | 25,799 | 1,019,694 | 259,169 | 42,667 | 31,589
>=60% and <80% | 2,771 | 376,094 | 81,106 | 21,337 | 9,536
>=80% and <100% | 1,067 | 131,874 | 46,414 | 58,121 | 49,541
>=100% | 979 | 74,888 | 73,472 | 61,705 | 40,249
Companies - Other Activities |  |  |  |  |
Without associated collateral | n.a. | 10,285,172 | 1,651,463 | 284,131 | 393,519
<60% | 49,259 | 1,563,296 | 495,030 | 141,344 | 65,781
>=60% and <80% | 16,491 | 991,449 | 329,502 | 128,863 | 48,995
>=80% and <100% | 11,106 | 576,326 | 406,133 | 72,826 | 47,386
>=100% | 2,741 | 654,901 | 202,769 | 280,711 | 146,244
Mortgage loans |  |  |  |  |
Without associated collateral | n.a. | 53,715 | 2,892 | 10,403 | 10,816
<60% | 383,344 | 13,363,029 | 1,310,064 | 261,616 | 102,636
>=60% and <80% | 129,126 | 8,530,613 | 844,549 | 112,000 | 32,431
>=80% and <100% | 39,677 | 2,884,194 | 357,767 | 58,421 | 19,953
>=100% | 6,013 | 235,017 | 60,244 | 30,008 | 15,674

As at 31 December 2021, the following table includes the LTV (loan-to-value) ratio by segments Construction and
Commercial Real Estate (CRE), Companies - Other Activities and Mortgage loans:

|  |  |  | (Thousands of euros)
| 2021
Segment/Ratio | Number of properties | Stage 1 | Stage 2 | Stage 3 | Impairment
Construction and CRE |  |  |  |  |
Without associated collateral | n.a. | 1,424,035 | 445,746 | 95,216 | 74,207
<60% | 27,798 | 970,377 | 222,871 | 48,352 | 27,275
>=60% and <80% | 2,954 | 463,338 | 132,369 | 15,611 | 11,035
>=80% and <100% | 1,139 | 151,733 | 32,023 | 55,414 | 34,538
>=100% | 1,006 | 84,817 | 111,936 | 70,487 | 40,012
Companies - Other Activities |  |  |  |  |
Without associated collateral | n.a. | 9,980,670 | 1,899,978 | 695,583 | 695,418
<60% | 49,685 | 1,371,462 | 575,090 | 139,700 | 59,772
>=60% and <80% | 16,637 | 811,111 | 334,522 | 164,667 | 68,698
>=80% and <100% | 12,242 | 649,604 | 390,780 | 133,205 | 89,029
>=100% | 3,266 | 625,990 | 519,368 | 160,142 | 142,482
Mortgage loans |  |  |  |  |
Without associated collateral | n.a. | 79,901 | 6,680 | 12,708 | 10,594
<60% | 372,586 | 12,771,509 | 1,124,487 | 230,446 | 82,434
>=60% and <80% | 132,538 | 8,118,509 | 845,140 | 131,474 | 32,559
>=80% and <100% | 53,980 | 3,584,503 | 436,402 | 85,040 | 21,262
>=100% | 10,056 | 470,774 | 84,150 | 60,405 | 26,797

| 2022 REPORT & ACCOUNTS

392 |
As at 31 December 2022, the following table includes the fair value and the net book value of the properties classified
as Non-current assets held for sale (note 27), by type of asset:

|  |  |  |  | (Thousands of euros)
| 2022
| Assets arising from recovered loans results | Assets belong to investments funds and real estate companies | Total
Asset | Appraised value | Book value | Appraised value | Book value | Appraised value | Book value
Land |  |  |  |  |  |
Urban | 126,593 | 84,970 | 199,094 | 199,094 | 325,687 | 284,064
Rural | 5,318 | 2,996 | 20,768 | 20,768 | 26,086 | 23,764
Buildings in development |  |  |  |  |  |
Commercials | 869 | 517 | — | — | 869 | 517
Mortgage loans | 2,550 | 1,491 | — | — | 2,550 | 1,491
Other | 11 | 11 | — | — | 11 | 11
Constructed buildings |  |  |  |  |  |
Commercials | 62,390 | 43,304 | — | — | 62,390 | 43,304
Mortgage loans | 82,549 | 64,015 | 185 | 185 | 82,734 | 64,200
Other | 38,697 | 38,574 | — | — | 38,697 | 38,574
| 318,977 | 235,878 | 220,047 | 220,047 | 539,024 | 455,925

As at 31 December 2021, the following table includes the fair value and the net book value of the properties classified
as Non-current assets held for sale (note 27), by type of asset:

|  |  |  |  | (Thousands of euros)
| 2021
| Assets arising from recovered loans results | Assets belong to investments funds and real estate companies | Total
Asset | Appraised value | Book value | Appraised value | Book value | Appraised value | Book value
Land |  |  |  |  |  |
Urban | 282,174 | 216,292 | 213,809 | 213,809 | 495,983 | 430,101
Rural | 20,195 | 14,745 | 3,097 | 3,097 | 23,292 | 17,842
Buildings in development |  |  |  |  |  |
Commercials | 869 | 517 | — | — | 869 | 517
Mortgage loans | 2,569 | 1,529 | — | — | 2,569 | 1,529
Constructed buildings |  |  |  |  |  |
Commercials | 145,039 | 104,144 | 11,497 | 11,497 | 156,536 | 115,641
Mortgage loans | 148,880 | 117,008 | 187 | 187 | 149,067 | 117,195
Other | 48,772 | 48,629 | — | — | 48,772 | 48,629
| 648,498 | 502,864 | 228,590 | 228,590 | 877,088 | 731,454

2022 REPORT & ACCOUNTS |

| 393
Credit portfolio monitoring process
The Bank adjusted its credit portfolio management and monitoring processes, namely with regard to the assessment of
the potential impacts of the macroeconomic context on the risk profile of the different portfolios/segments of
exposure, an approach that was consolidated in 2022.
This modification, that began in 2020, was based on the creation of a specific approach with the objective of
identifying and closely monitoring the customers potentially more affected by the macroeconomic context, anticipating
possible difficulties in complying their responsibilities and defining credit and performance strategies adjusted to the
specific specificities of each customer/group of customers, with a view to both maintaining support to customers
considered viable and mitigating credit risk.
The importance of this new approach is reinforced by the uncertainty that impacted the activity in recent times. In
fact, while it is true that the effects of the pandemic have faded, new risks have emerged in the meantime, especially
those resulting from the geopolitical conflict between Russia and Ukraine, reinforcing threats that were already
appearing in areas such as constraints in logistics and distribution chains, limitations in access to raw materials and
certain goods, increased energy costs, inflationary pressures and rising interest rates.
The main guidelines of the credit portfolio monitoring approach can be characterized as presented below:
- Global and transversal: Is supported by an analysis of the entire credit portfolio of the Bank, being excluded from the
special monitoring only customers with a better risk profile (in the case of retail) or with exposures of a lower size (in
the case of retail and corporate).
- Specialized: Monitoring by the “Comité de Acompanhamento de Risco de Empresas” (CARE), and Credit Division in
coordination with the Rating Division for the corporate segment and by the Retail Recovery Division for individuals and
small businesses. The cases monitored by the CARE Committee, which is conducted at least monthly, are related to
clients covered by a set of criteria that combine exposure size and risk factors like the rating assigned, IFRS 9 staging
and, for the corporate segment, the level of leverage and whether the sector in which it operates is considered highly
vulnerable.
- Segmented: Prioritization of approach/analysis recurrence based on risk signs, in order to gather additional
information and agree on appropriate and sustainable financial restructuring solutions in a timely manner.
- Prospective: Definition of predictive models, in order to anticipate potential future defaults, avoiding a reactive
approach.
- Standardized: Both in terms of risk models and monitoring, and in terms of credit solutions for which it is possible to
identify pre-defined alternatives (retail segments).
- Convenient and innovative: Making the restructuring journey simpler and more convenient both in terms of credit
solutions and channels, extending the restructuring offer to the App for consumer credit and mortgages.
Specifically in the corporate segment, the process of portfolio follow-up and monitoring can be generically
characterized as described below, having as a fundamental component the attribution of credit strategies, among pre-
defined options, with review periods differentiated according to the level of risk associated to the strategy attributed:
1. Client Assessment and presentation of Indicative Credit Strategy by the Rating Division (for customers with ratings
assigned by corporate rating models);
2. Approval, by the competent credit decision levels, of a credit strategy for each customer, taking into consideration
the Indicative Credit Strategy received from the Rating Division, the proposals received from the area that follows the
client and the inputs received as a result of the customer interaction process;

| 2022 REPORT & ACCOUNTS

394 |
3. Decision, negotiation and formalisation of the operations that will ensure that the approved strategy is pursued and
the approved credit limits are met (Credit Division, Areas that follow the client and Operations Division);
4. Monitoring the Credit Strategy and the evolution of the customer's activity (Credit Division, Areas that follow the
client and Specialised Committees - CARE);
5. Monitoring of the credit portfolio and effectiveness of the portfolio monitoring process and credit strategy
attribution (Risk Office), based on a set of KPIs, (e.g. percentage of the credit portfolio with valid risk strategy;
evolution of credit exposure to customers with a reduction strategy; adequacy of the credit strategy to the customer's
performance);
6. In the attribution of the customer's credit strategy, besides the intrinsic factors of the customer, more transversal
factors are taken into consideration, such as the evaluation of the sectorial risk and ESG impacts (periodically reviewed
with the support of the Economic, Sustainability and Criptoactives Studies Division)
7. The occurrence of effective and/or potential risk events (signs of default/delinquency; breach of contractual
covenants; severe alteration in sector risk; alteration in the corporate/shareholder structure), trigger an extraordinary
revision of the strategy.
Within the scope of this monitoring process and with an impact on other and differentiated procedures adopted by the
Bank, namely for reporting purposes, the Bank defines a list of sectors considered as more vulnerable to the
macroeconomic environment, which is reviewed periodically (at least annually).
At least once a year the Bank produces a report presenting a detailed characterisation of its loan portfolio under a
sectoral perspective.
Additional measures with impact on the Impairment level
i. Updating macroeconomic scenarios and the parameters of the collective impairment model
Taking into account the changes and uncertainty of the context and the economic perspectives essentially marked by a
transition from a pandemic context to one conditioned by expressive rises in the inflation and interest rate levels, as
well as by crisis in various supply chains, it was decided to update the regressions and macroeconomic scenarios
considered in the collective analysis model in Portugal, namely with the aim to capture the effect of variables such as
inflation and interest rates.
Specifically, in what regards the macroeconomic scenarios, at the end of December the macroeconomic assumptions
used in the impairment calculation were updated, based on three scenarios (Central Scenario, Upside and Downside)
prepared by the Bank's Economic Studies Department.
The referred scenarios, which are used in the Bank for several purposes other than the impairment calculation, took
into consideration the existing projections of reputed entities.
The tables below systematise the assumptions considered for Portugal for the central scenarios with regard to some of
the most critical variables used in the calculation of collective impairment with reference to 31 December 2022.
Update of main macroeconomic scenario assumptions (Base Scenario) - Portugal

| December 2022 Scenario
Variable | 2022 | 2023
Unemployment rate | 5.86% | 5.88%
3 months Euribor Rate | 0.65% | 3.34%
Savings Rate | 4.4% | 5.8%
Inflation Rate | 8.06% | 5.83%

2022 REPORT & ACCOUNTS |

| 395
Regarding Poland, an update of the macroeconomic assumptions was also carried out in relation to those considered in
December 2021, which translates into the terms presented in the table below regarding the projections for 2022 and
2023 foreseen in the central scenario.
Update of main macroeconomic scenario assumptions (Base Scenario) - Poland

Variable | December 2022 Scenario
2022 | 2023
Unemployment rate | 5.40% | 5.80%
Nominal GDP annual evolution | 16.20% | 13.80%
Consumption annual evolution | 4.90% | 0.70%
Disposable Income | 10.80% | 4.90%
EUR/PLN exchange rate | 4,71 | 4,64
CHF/PLN exchange rate | 4,80 | 4,65

The following tables describe the weightings assigned in Portugal and Poland to the different macroeconomic scenarios
considered at the end of 2021 and December 2022, which can be considered as conservative:
Weightings of the macroeconomic scenarios considered

Scenario | Weightings
Portugal | Poland
Dec 2021 | Dec 2022 | Dec 2021 | Dec 2022
Central | 60% | 60% | 60% | 65%
Upside | 10% | 10% | 20% | 10%
Downside | 30% | 30% | 20% | 25%

In Portugal, in order to provide a sensitivity to the impact of a more unfavourable evolution than projected in the
macroeconomic scenario described above of especially critical variables for the estimation of collective impairment
(unemployment rate, 3 months Euribor, Savings Rate and Inflation Rate) a simulation was made of an additional
worsening of one percentage point in the evolution of these indicators, which translates into the impacts presented in
the table below, based on the collective impairment of the portfolio in Portugal on 31 December 2022, which amounted
to Euros 433 million (this amount does not include the impairment amounts calculated by the overlays methodology
described in point ii. of the section " Additional measures with impact on the Impairment level”).
Sensitivity analysis on the calculation of collective impairment (December 2022)

Variable | Estimated impact (% variation)
100 bp Unemployment Rate aggravation | 4,66%
100 bp 3 months Euribor aggravation | 7,06%
100 bp Savings Rate aggravation | 0,47%
100 bp Inflation Rate aggravation | 4,73%

| 2022 REPORT & ACCOUNTS

396 |
ii. Impairment overlays
In order to incorporate an additional level of conservatism in the impairment values, the Bank defined and
implemented a methodology of complementary identification of situations of significant increase in credit risk and signs
of impairment. This approach adopts complementary and distinct criteria in relation to the methodologies in force,
with distinct processes having been adopted for the calculation of overlays for the corporate and individual customers
segments.
In fact, the impacts related to the COVID-19 pandemic have been losing expression, namely as a result of the time
elapsed since the end of the large majority of the moratoria (September 2021) and given that some of the most
affected sectors have already overcome the challenges posed by this crisis. However, there is a level of uncertainty
associated with the current geopolitical crisis, disruption in distribution chains, rising energy costs and inflationary
pressures.
Under this framework, in Portugal, the Bank has changed its methodology for the overlays calculation, adopting an
approach which reflects the context described above, which implied a disruption to the framework which prevailed up
to the end of 2021, characterized by low levels of interest rates and inflation.
This positioning is in line with the guidelines on this matter issued by the Supervisors in what regards the identification
and measurement of credit risk in contexts of uncertainty, so that the release of overlays constituted in the context of
the pandemic should be carried out with prudence and taking into account the possible need for new overlays to
respond to the current context.
The exercise carried out reflected, in terms of impairment value, in the calculation of the estimated impact arising
from potential migrations of customers with higher risk to Stage 2 and Stage 3, based on the various factors considered
in the analysis. It should be noted that the most significant impact occurred in the corporate segment. The
methodology developed by the Bank was considered for the calculation and recording of impairment at the reference
date of the accounts, without affecting the classification of credit exposures by stages in the Bank's loan portfolio.
In Poland, the Bank also adopted a policy of recording overlays. Taking into consideration the country's specific reality,
adjustments to the overlays methodology had already been incorporated in the first half of the year to address the
impacts of the geopolitical crisis.
As a result of the implementation of this methodology, the Bank calculated an additional impairment to that resulting
from the collective analysis model, therefore with characteristics of overlays, whose amount on 31 December 2022 was
approximately Euros 95.0 million in Portugal (Euros 71.1 million in June 2022) and Euros 33.9 million in Poland (Euros
23.4 million in June 2022).
ii. Risk Grade freeze of clients rated by behavioural models
Assuming a conservative perspective, in Portugal, the Bank implemented a procedure whereby it identified the
customers subject to moratorium with internal risk rating awarded by behavioural models that at the end of December
showed an improvement in the risk level in comparison with the one existing before the moratoria and, for these cases,
assumed for purposes of staging criteria and impairment calculation the maintenance of that pre-moratoria risk rating.
This procedure did not imply a change in the internal risk rating attributed by the Bank.
From March 2022 onwards the above-mentioned procedure was no longer applied, given that the vast majority of
moratoria had ended in September 2021 and the remaining in the end of December 2021. As such, the Bank considered
that an elapsed period is more than enough to consider that the behavioural rating models are no longer affected by
the previous existence of moratoria.

2022 REPORT & ACCOUNTS |

| 397
Operations subject to legislative and non-legislative moratorium and new loans granted under
new public guaranteed systems introduced in response to the COVID-19 crisis
The following tables characterize the transactions that, as of 31 December 2022 and 31 December 2021, were subject
to legislative and non-legislative moratorium, as well as new loans granted under new public guaranteed systems
introduced in response to the COVID-19 crisis, at consolidated level.
As of 31 December 2022 and 31 December 2021, the amounts related with the moratoria in force are null.
Loans and advances subject to legislative and non-legislative moratorium
The analysis of the gross carrying amount and respective impairment, of loans and advances that have ever been
subject to legislative and non-legislative moratorium, with reference as at 31 December 2022:

|  |  | (Thousands of euros)
| Gross carrying amount
|  |  | Performing |  | Non-performing |
| Total |  | Of which: exposures with forbearance measures | Of which Stage 2 (*) |  | Of which: exposures with forbearance measures | Of which: Unlikely to pay that are not past-due or past-due <= 90 days | Inflows to non- performing exposures in the last 12 months
Loans and advances subject to moratorium | 8,626,118 | 7,753,682 | 360,015 | 2,181,916 | 872,436 | 584,806 | 740,621 | 373,358
of which: Households | 4,417,087 | 4,177,902 | 234,854 | 857,087 | 239,185 | 143,336 | 159,863 | 112,404
of which: Collateralised by residential immovable property | 3,875,782 | 3,733,170 | 202,408 | 748,053 | 142,612 | 89,873 | 111,963 | 72,969
of which: Non- financial corporations | 4,141,382 | 3,526,701 | 122,418 | 1,313,634 | 614,681 | 422,915 | 562,204 | 260,941
of which: Small and Medium-sized Enterprises | 3,789,598 | 3,235,758 | 121,308 | 1,231,214 | 553,840 | 388,948 | 504,124 | 236,774
of which: Collateralised by commercial immovable property | 1,577,218 | 1,138,663 | 65,753 | 565,159 | 438,555 | 332,263 | 422,964 | 205,280

(*) Instruments with significant increase in credit risk since initial recognition but not credit-impaired.

| 2022 REPORT & ACCOUNTS

398 |

|  | (Thousands of euros)
| Accumulated impairment (**)
|  |  | Performing |  | Non-performing
| Total |  | Of which: exposures with forbearance measures | Of which Stage 2 (*) |  | Of which: exposures with forbearance measures | Of which: Unlikely to pay that are not past-due or past-due <= 90 days
Loans and advances subject to moratorium | 468,971 | 98,882 | 8,658 | 79,585 | 370,089 | 282,736 | 314,400
of which: Households | 86,079 | 21,528 | 2,729 | 16,837 | 64,551 | 35,542 | 31,950
of which: Collateralised by residential immovable property | 30,227 | 9,901 | 1,004 | 8,193 | 20,326 | 13,993 | 15,261
of which: Non-financial corporations | 363,087 | 76,077 | 5,379 | 61,625 | 287,010 | 228,671 | 263,927
of which: Small and Medium-sized Enterprises | 325,495 | 72,282 | 5,295 | 59,311 | 253,213 | 209,448 | 231,738
of which: Collateralised by commercial immovable property | 211,680 | 25,768 | 2,003 | 23,236 | 185,912 | 162,720 | 181,168

(*) Instruments with significant increase in credit risk since initial recognition but not credit-impaired.
(**) The impairment presented in the table does not include the amounts of impairment calculated using the overlays methodology described in
point ii. of the section "Additional measures with impact on the Impairment level" of this note.
The analysis of the gross carrying amount and respective impairment, of loans and advances that have ever been
subject to legislative and non-legislative moratorium, with reference as at 31 December 2021:

|  |  | (Thousands of euros)
| Gross carrying amount
|  |  | Performing |  | Non-performing |
| Total |  | Of which: exposures with forbearance measures | Of which Stage 2 (*) |  | Of which: exposures with forbearance measures | Of which: Unlikely to pay that are not past-due or past-due <= 90 days | Inflows to non- performing exposures in the last 12 months
Loans and advances subject to moratorium | 10,939,554 | 9,990,621 | 696,426 | 3,145,093 | 948,933 | 603,174 | 834,070 | 333,500
of which: Households | 5,212,656 | 4,968,993 | 258,573 | 1,038,745 | 243,663 | 145,907 | 183,807 | 148,835
of which: Collateralised by residential immovable property | 4,533,171 | 4,384,126 | 228,269 | 915,413 | 149,045 | 97,934 | 134,940 | 77,684
of which: Non- financial corporations | 5,632,584 | 4,952,474 | 436,068 | 2,046,523 | 680,110 | 436,937 | 625,105 | 184,663
of which: Small and Medium-sized Enterprises | 5,085,424 | 4,503,348 | 372,415 | 1,847,727 | 582,076 | 379,997 | 564,032 | 160,075
of which: Collateralised by commercial immovable property | 1,895,246 | 1,590,586 | 286,092 | 988,440 | 304,660 | 179,465 | 302,064 | 100,596

(*) Instruments with significant increase in credit risk since initial recognition but not credit-impaired.

2022 REPORT & ACCOUNTS |

| 399

|  | (Thousands of euros)
| Accumulated impairment (**)
|  |  | Performing |  | Non-performing
| Total |  | Of which: exposures with forbearance measures | Of which Stage 2 (*) |  | Of which: exposures with forbearance measures | Of which: Unlikely to pay that are not past-due or past-due <= 90 days
Loans and advances subject to moratorium | 553,384 | 149,636 | 30,170 | 116,166 | 403,748 | 292,759 | 341,535
of which: Households | 82,892 | 23,826 | 1,263 | 15,128 | 59,066 | 28,719 | 32,192
of which: Collateralised by residential immovable property | 27,624 | 8,881 | 650 | 5,337 | 18,743 | 11,215 | 15,451
of which: Non-financial corporations | 443,230 | 123,257 | 28,399 | 98,551 | 319,973 | 244,161 | 284,634
of which: Small and Medium-sized Enterprises | 380,880 | 115,080 | 26,813 | 92,831 | 265,800 | 202,059 | 258,473
of which: Collateralised by commercial immovable property | 178,995 | 56,281 | 22,189 | 52,713 | 122,714 | 88,507 | 122,342

(*) Instruments with significant increase in credit risk since initial recognition but not credit-impaired.
(**) The impairment presented in the table does not include the amounts of impairment calculated using the overlays methodology described in
point ii. of the section "Additional measures with impact on the Impairment level" of this note.
Loans and advances granted under new public guaranteed schemes introduced in response to the COVID-19 crisis
In what concerns the loans granted under new public guaranteed schemes, we present below the exposure breakdown
by segment, the amount of the associated guarantee and an indication of the portion classified as restructured due to
financial difficulties or classified as non-performing is presented.
As at 31 December 2022, the analysis of the loans and advances subject to public guarantee schemes is as follows:

|  |  | (Thousands of euros)
| 2022
| Gross carrying amount | Maximum amount of the guarantee that can be considered | Gross carrying amount
|  | of which: forborne | Public guarantees received | Inflows to non-performing exposures in the last 12 months
Newly originated loans and advances subject to public guarantee schemes | 2,364,357 | 2,427 | 1,955,939 | 22,442
of which: Households | 12,240 | — | 10,836 | 168
of which: Collateralised by residential immovable property | 233 | — | 210 | —
of which: Non-financial corporations | 2,351,605 | 2,427 | 1,944,663 | 22,268
of which: Small and Medium-sized Enterprises | 2,162,873 | 2,427 | 1,810,326 | 22,268
of which: Collateralised by commercial immovable property | 81,559 | — | 60,860 | 1,006

| 2022 REPORT & ACCOUNTS

400 |
As at 31 December 2021, the analysis of the loans and advances subject to public guarantee schemes is as follows:

|  |  | (Thousands of euros)
| 2021
| Gross carrying amount | Maximum amount of the guarantee that can be considered | Gross carrying amount
|  | of which: forborne | Public guarantees received | Inflows to non-performing exposures in the last six months
Newly originated loans and advances subject to public guarantee schemes | 2,835,674 | 1,215 | 2,186,423 | 18,500
of which: Households | 15,381 | — | 13,572 | 52
of which: Collateralised by residential immovable property | 275 | — | 248 | —
of which: Non-financial corporations | 2,819,709 | 1,215 | 2,172,353 | 18,447
of which: Small and Medium-sized Enterprises | 2,531,939 | 1,215 | 2,048,765 | 16,172
of which: Collateralised by commercial immovable property | 90,342 | — | 74,859 | 1,551

Analysis of the impacts of geopolitical conflict in Eastern Europe
Since the outbreak of the Russia/Ukraine conflict, the Bank has performed a set of quantitative and qualitative analysis
to assess the potential impacts in the performance of the credit portfolio.
This evaluation was carried out, particularly, in Portugal and Poland, the latter being a geography potentially more
exposed to the impacts of this event, considering it is a neighbouring country of Ukraine.
Taking into consideration that it is not possible to foresee how the conflict will evolve, it is difficult to determine to
the full extent of the economic consequences in the Bank’s business and near/mid-term prospects, namely regarding
the effects of the impacts on the energy sector, on the distribution chains of several products and commodities, on
inflationary pressures and on the level of interest rates.
Nevertheless, specific portfolios were identified as being potently more vulnerable and for which more closely
monitoring procedures were putted in place.
i. Retail segment:
By principle the entities of the Group are not promoting neither granting loans to citizens with residence in foreigner
countries.
Consequently, as of the end of December 2022, the volume of credit exposures linked with citizens with residence in
Russia, Belarus and Ukraine (the largest majority in Ukraine) in the household segment was negligible (circa 1,6 million
euros in Portugal and 0,4 million euros in Poland).
In what regards credit exposures to citizens of Ukraine with residence in Poland the values amounted to about 1.3% of
Bank Millennium Group retail portfolio, divided between 60% for cash loans and 40% for mortgages loans (these loans
are collateralized with real estate assets located in Poland).
Those exposures are subject to frequent monitoring, and no signs of deterioration has been observed so far, despite the
social impacts of the migration flows from Ukrainian citizens to Poland.

2022 REPORT & ACCOUNTS |

| 401
On the other hand, retail borrowers in Poland are also particularly exposed to increased inflation and higher zloty
interest rates. At the end of December 2022, within the scope of the monitoring framework the Bank in Poland
identified a so called “at risk portfolio” representing circa 7% of the cash loan portfolio (high inflation being the key
risk factor) and 8% of the mortgage portfolio (increased interest rates is the key risk factor).
Both sub-portfolios start to show soft signs of deterioration, but the level of new defaults is not material – below 8.5
million euros as at the end of 2022.
No signals of deterioration of the quality of the household portfolio were so far observed in Portugal.
ii. Corporate segment:
An analysis of 1st order (direct impacts), 2nd order (exposure to targets with Russia/Ukraine trade channels) and 3rd
order (wider macro-economic impacts) was conducted.
- In what concerns 1st order effects, both at the Group level as well as at the level of each of the subsidiaries the
volume of credit exposure is negligible, as the Group does not operate directly in Ukraine, Russia or Belarus and does
not have corporate clients domiciled in Russia or Ukraine.
- Concerning 2nd order effects, in a first assessment, no major cases were identified in Portugal. The perception built
in the first semester was confirmed in practical terms in the second semester through the observation of the reality of
the Bank's clients. In what concerns Bank Millennium in Poland, all the debtors with a share in the structure of either
suppliers/customers, from the Ukraine, Russia and Belarus markets, above 15%, were considered as potentially more
vulnerable and were assessed on a case-by case-basis.
- Regarding a more-broader macroeconomic perspective (3rd order effects), the Bank updated at the end of the first
semester the list of sectors potentially more vulnerable to the current macroeconomic and geopolitical context, which
remains in force.
In what concerns the internal rating structure of the credit portfolio in vulnerable sectors, we can conclude that 7,5%
of the portfolio is classified as non-performing and around 54% are allocated to risk grade 8 or better.
For those clients potentially more affected, directly and/or indirectly, by the conflict it was applied a bottom-up
monitoring approach.
The bottom-up assessment is supported by the combination of a comprehensive credit monitoring initiatives, notably:
1. the update of the impairment signs questionnaire (for customers with more significant exposures).
2. the process of assignment of a set of pre-defined credit strategy to each client (less favourable strategies have
shorter periods of validity and the assignation of a "minimization of expected loss” strategy implies the reclassification
of the Client to Stage 3.)
3. specific engagement questionnaire sent to corporate clients to assess the impacts of the conflict after it arose, and
its conclusions are considered to remain valid, as the reality found in the daily interaction with clients confirms.
Until the end of December 2022, no relevant signs of risk continue to be not identified (the total volume of credits
associated with performing clients with past due exposures represents only 0,2% of total exposures).

| 2022 REPORT & ACCOUNTS

402 |
In Poland the analysis of the impact in Corporate clients was supported on a case-by-case review of a significant part of
the corporate portfolio, independently of the sector of activity of each client.
Following the review of the companies' exposures, namely taking into account the 15% materiality/exposure factor
mentioned above, Bank Millennium (Poland) conducted a separate check of the companies exposed to risks related to
the conflict in Ukraine, and a subset of companies with a total exposure of EUR 81.8 million (Q3 2022 figures),
equivalent to only 1.4% of the Bank Millennium Group's portfolio of companies. All the companies identified have
already implemented measures to diversify their supply chains, so no company was considered that needed being
treated as significantly exposed to this risk. Regardless of the positive experience to date, Bank Millennium Group
decided to temporarily avoid increasing funding to this set of companies.
Application of Decree-Law 80-A/2022 - Mitigation of impacts on mortgage contracts
Specifically with regard to Decree-Law 80-A/2022, a Portuguese Government act of 25 November 2022 that established
measures to mitigate the effects of the increase in the reference indexing factors of credit contracts for the acquisition
or construction of permanent house ownership, it is worth highlighting the fact that it introduced the obligation for
Financial Institutions to approach individual customers with mortgage credit who potentially fit into the requirements
set out in that act.
In what concerns Millennium bcp, a contact was promoted with about 180 thousand customers, requesting information
in order to calculate the respective effort rate. At the end of December 2022, the number of customers who showed
interest in joining the mechanisms provided for in Decree-Law 80-A/2022 was limited, especially given that the
deadline for replying to the Bank's contact only ended in January 2023.
On 28 February 2023 the number of restructuring requests under Decree Law 80-A/2022 amounted to only 5 thousand
customers, of which only 4 thousand meet the conditions for potential implementation of restructuring measure.
Credit concentration risk
The Group’s policy relating to the identification, measurement, and evaluation of the concentration risk in credit risk is
approved by the Bank’s management body, applied to all Group entities, and is based on the following guidelines:
The monitoring of the concentration risk and the follow-up of major risks is made, at Group level, based on the concept
of "Economic Groups" and “Customer Groups” - sets of connected Customers (individual persons or companies), which
represent a single entity from a credit risk perspective, such that if one of them is affected by financial problems, one
or all of the others, will probably face difficulties to fulfil their debtor obligations. The Customer connections that
originate a Customer group include the formal participation on the same economic group, the evidence that a direct or
indirect control relationship exists, including the control by an individual Customer (criteria of capacity of control) of a
company or the existence of a strong commercial interdependency or common sources of funding that cannot be
replaced on a short term (criteria of economic dependency).The identification of connected clients is an integral part
of the credit granting and monitoring processes of each entity.
For the control of credit concentration risk and limit the exposure to this risk, there are limits defined for:
1)Exposures to Sovereigns;
2)Exposures to Institutions (Banks/financial institutions);
3)Single-name exposures (Large Corporate exposures);
4)Geographic concentration (country risk);
5)Exposure to sectors of activity.

2022 REPORT & ACCOUNTS |

| 403
These limits apply to the ‘Net exposures’ (*), relating either to a counterparty or a group of counterparties – cases for
1), 2) and 3) – or to the set of exposures to an activity sector or to a country (the counterparty country of residence) –
cases for 4) and 5). The metrics regarding the concentration of exposure to Sovereigns and geographic concentration
exclude the countries in which the Group has significant operations (Portugal, Poland and Mozambique) and the
respective Sovereigns.
Except for exposure to sectors of activity, the concentration limits are established by taking into consideration the
credit worthiness of the debtors at stake in what concerns their rating grades/probability of Default (PD) (internal or
external ratings; country rating in the case of geographic concentration).
The concentration limits for Corporate single-name exposures apply only to non-NPE positions, since the NPE(**)
positions are covered by the NPE reduction Plan defined and executed at Group BCP level.
The limits in force as at 31 December 2022, for the exposure to Single-name, in terms of the Net Exposure weight over
the Consolidated Own Funds, are the following:

Risk quality | Risk grade | Single-name
High quality | 1 - 5 | 7.0%
Average/good quality | 6 - 7 | 4.5%
Average low/quality | 8 - 9 | 3.0%
Low quality | 10 - 11 | 0.6%
Restricted credit | 12 - 13 | 0.3%

(*) Net exposure = EAD x LGD, considering LGD=45% whenever own estimates for LGD are not available or applicable. EAD = Exposure
at default ; LGD = Loss given Default;
(**) NPE = Non-performing exposures
As at 31 December 2022:
- There were no exposure excesses to Sovereigns, Institutions or countries;
- There were 4 Economic Groups with net exposure above the established Single-name limits for their respective risk
grade. For each client with an exposure excess a specific plan is prepared, aiming at reducing the exposure and
bringing it within the established limits.
It should also be referred that the assessment of the Single-name concentration is also performed within the Group RAS
(Risk Appetite Statement) scope.
In what concerns the limit for exposure to sectors of activity, in force on 31 December 2022, this is defined as a
maximum of 40% per sector of activity, in terms of the weight of the Net Exposure for each sector of activity over the
Own Funds of each Group Entity. At this date, there was no excess over this limit.
The Bank's management body and the Risk Assessment Committee are regularly informed on the evolution of the credit
concentration risk metrics (against the mentioned limits) and on major risks.
The credit concentration risk is measured and monitored by the Risk Office supported on a database on credit
exposures (the Risk Office Datamart), monthly updated by the Group’s systems, which feeds the risk management
system of the Group.
The Risk Office maintains a simulation tool for supporting the analysis of the impact on changes on the Customers
exposures in the consumption of the respective concentration limits, which is used by the Credit Division and by the
Commercial Networks within the scope of credit analysis for large clients.

| 2022 REPORT & ACCOUNTS

404 |
Market risk
Market risks consist of the potential losses that might occur in a given portfolio as a result of changes in interest or
exchange rates and/or in the prices of the different financial instruments of the portfolio, considering not only the
correlations that exist between those instruments but also their volatility.
For purposes of profitability analysis and market risks quantification and control, the following management areas are
defined for each entity of the Group:
- Trading - Management of positions whose objective is the achievement of short-term gains, through sale or
revaluation. These positions are actively managed, tradable without restriction and may be valued frequently and
accurately. The positions in question include securities and derivatives of sales activities;
- Funding - Management of institutional funding (wholesale funding) and money market positions;
–Investment - Management of all the positions in securities to be held to maturity (or for a longer period of time) or
positions which are not tradable on liquid markets;
- Commercial - Management of positions arising from commercial activity with Customers;
- Structural - Management of balance sheet items or operations which, due to their nature, are not directly related to
any of the management areas referred to above; and
- ALM - Assets and Liabilities Management.
The definition of these areas allows for an effective management separation of the trading and banking books, as well
as for the correct allocation of each operation to the most suitable management area, according to its respective
context and strategy.
In order to ensure that the risk levels incurred in the different portfolios of the Group comply with the predefined
levels of tolerance to risk, various market risks limits are established, at least yearly, being applicable to all portfolios
of the risk management areas over which the risks are incident. These limits are monitored on a daily basis (or intra-
daily, in the case of financial markets) by the Risk Office.
Stop loss limits are also defined for the portfolios of the financial markets areas – Trading and Financing – based on
multiples of the risk limits defined for them, aiming to limit the maximum losses that may occur in these areas. If these
limits are reached, a review of the underlying business strategy and the assumptions relating to the management of the
positions in question is mandatory
Market risks of the prudential trading book (1)
For the daily measurement of general market risk - including interest rate risk, exchange rate risk, equity risk and price
risk of credit default swaps (indexes) - a VaR (value-at-risk) model is used, considering a time horizon of 10 business
days and a significance level of 99%.
The Group also uses another integrated market risk measure that allows monitoring of all risk sub-types considered
relevant. This measure integrates the assessment of generic risk, specific risk, non-linear risk and commodity risk. Each
of these sub-types of risk is measured individually, using an appropriate risk model, with the integrated measure
calculated from the measures for each one, without considering any type of diversification between the four sub-types
(worst approach case scenario).
For non-linear risk, an internally-developed methodology is applied, replicating the effect that the main non-linear
elements of options might have in P&L results of the different portfolios in which these are included, similarly to what
is considered by the VaR methodology, using the same time horizon and significance level.
Specific and commodity risks are measured through standard methodologies defined in the applicable regulations, with
an appropriate change of the time horizon considered.

2022 REPORT & ACCOUNTS |

| 405
The table below presents the amounts at risk for the Trading Book, as at 31 December 2022 and 2021, measured by the
methodologies referred to above:

|  |  | (Thousands of euros)
| 2022 | Max of global risk in the period | Min of global risk in the period | 2021
Generic Risk ( VaR ) | 1,322 | 6,586 | 1,049 | 1,533
Interest Rate Risk | 1,011 | 3,836 | 962 | 1,432
FX Risk | 841 | 4,195 | 482 | 469
Equity Risk | 585 | 36 | 589 | 274
Diversification effects | 1,114 | 1,481 | 984 | (642)
Specific Risk | 13 | 37 | 15 | 35
Non-Linear Risk | — | — | — | —
Commodities Risk | — | — | — | —
Global Risk | 1,335 | 6,623 | 1,064 | 1,568

In order to check the appropriateness of the internal VaR model to the assessment of the risks involved in the positions
held, several validations are conducted over time, of different scopes and frequency, which include back testing, the
estimation of the effects of diversification and the analysis of the comprehensiveness of the risk factors.
As a complement to the VaR assessment, the Group continuously tests a broad range of stress scenarios analysing the
respective results with a view to identifying risk concentrations that have not been captured by the VaR model.
Interest rate risk
The evaluation of interest rate risk derived from Banking Book operations is assessed through a process of risk
sensitivity analysis, undertaken every month, covering all the operations included in the Group's consolidated Balance
Sheet and discriminated by exposure currency.
Variations of market interest rates influence the Group's net interest income, both in the short term and medium/long
term, affecting its economic value in a long-term perspective. The main risk factors arise from the repricing mismatch
of portfolio positions (repricing risk) and from the risk of variation in market interest rates (yield curve risk). Besides
this, although with less impact, there is the risk of unequal variations in different reference rates with the same
repricing period (basis risk).
In order to identify the exposure of the Group's banking book to these risks, the monitoring of the interest rate risk
takes into consideration the financial characteristics of each of the relevant contracts, with the respective expected
cash-flows (principal and interest, without the spread component but including costs for liquidity, capital, operational
and other) being projected according to the repricing dates, thus calculating the impact on economic value resulting
from alternative scenarios of change of market interest rate curves.
The interest rate sensitivity of the balance sheet, by currency, is calculated as the difference between the present
value of the interest rate mismatch discounted at market interest rates and the discounted value of the same cash
flows simulating parallel shifts of the market interest rates.
(1) Trading Book - positions allocated to the Trading Management Area (and not specifically to the accounting trading book)

| 2022 REPORT & ACCOUNTS

406 |
The following tables show the expected impact on the banking book economic value of parallel shifts of the yield curve
by +/- 100 and +/- 200 basis points, for each of the main currencies in which the Group holds material positions:

|  |  | (Thousands of euros)
| 2022
Currency | -200 bp(*) | - 100 bp (*) | + 100 bp | + 200 bp
CHF | 1,422 | 741 | (763) | (1,544)
EUR | (99,549) | (50,069) | 50,011 | 99,465
PLN | (71,253) | (35,436) | 34,996 | 69,502
USD | (32,091) | (15,661) | 14,937 | 29,193
| (201,471) | (100,425) | 99,181 | 196,616

(*) Decrease in rates scenario, limited to non-negative rates (which implies effective variations of lesser amplitude than 100 bp,
especially in shorter periods).

|  |  | (Thousands of euros)
| 2021
Currency | -200 bp(*) | - 100 bp (*) | + 100 bp | + 200 bp
CHF | (1,283) | (1,284) | 2,949 | 5,802
EUR | (49,468) | (50,226) | 103,583 | 200,789
PLN | (100,182) | (49,203) | 47,484 | 93,306
USD | (32,171) | (16,049) | 15,286 | 29,847
| (183,104) | (116,762) | 169,302 | 329,744

(*) Decrease in rates scenario, limited to non-negative rates (which implies effective variations of lesser amplitude than 100 bp,
especially in shorter periods).
As described in accounting policy 1.B, the financial statements of the Group's subsidiaries and associates placed abroad
are prepared in their functional currency and translated into Euros at the end of each financial period. The exchange
rates used for the conversion of balance sheet foreign currency amounts are the ECB reference rates at the end of each
period. In foreign currency conversion of results, are calculated average exchange rates according to the closing
exchange rates of each month of the year. The rates used by the Group are as follows:

| Closing exchange rates | Average exchange rates
| (Balance sheet) | (Income statement)
Currency | 2022 | 2021 | 2022 | 2021
AOA | 543.2680 | 632.4200 | 487.7116 | 747.0708
BRL | 5.6390 | 6.3364 | 5.4153 | 6.3950
CHF | 0.9872 | 1.0362 | 1.0042 | 1.0811
MOP | 8.5744 | 9.1330 | 8.5744 | 9.1330
MZN | 68.1850 | 72.9000 | 67.5585 | 77.9329
PLN | 4.6816 | 4.5839 | 4.6823 | 4.5623
USD | 1.0667 | 1.1373 | 1.0537 | 1.1833

2022 REPORT & ACCOUNTS |

| 407
Foreign exchange and equity risk of the banking book
The foreign exchange risk of the banking book is transferred internally to the Trading Area, in accordance with the risk
specialization model followed by the Group for the management of the balance sheet foreign exchange risk. The
structural foreign exchange exposures, namely those resulting from financial holdings in subsidiaries, are not included
in this transfer and are hedged through market operations, taking into consideration the defined strategy for managing
structural foreign exchange risk, whose objective is to hedge against the volatility in the CET1 ratio that stems from
changes in foreign currency exchange rates.
As at 31 December 2022, the Group 's financial investments in foreign currency were not hedged.
Whenever these hedges exist on a consolidated basis, are identified in accounting terms as net investment hedges, in
accordance with the IFRS nomenclature. On an individual basis, they are designated as fair value hedges of equity
investments.
The information on the gains and losses on instruments used to hedge net investments in foreign institutions are
recognized in foreign exchange reserves and presented in the statement of comprehensive income.
The transfer to Portugal of funds, including dividends, that are owed by BCP's subsidiaries or associates in third
countries, namely outside the European Union, may be subject to the restrictions and exchange controls that, at any
given time, are in force in the country in which the subsidiaries are constituted or associated.
In what concerns to the equity risk, the Group keeps a set of small-scale, low-risk positions, essentially in the
investment portfolio, namely resulting from execution/payment processes. The management of these positions is
carried out by a specialized area of the Group, with the respective risk being controlled through the metrics and limits
defined for controlling market risks.
Liquidity risk
The evaluation of the Group’s liquidity risk is carried out using indicators defined by the supervisory authorities on a
regular basis and other internal metrics for which exposure limits are also defined.
The monitoring of the liquidity position of the Group's operations in short-term time horizons (up to 3 months) is based
on two internally defined indicators (immediate liquidity and quarterly liquidity). These indicators are calculated on a
daily basis, taking into account the impact in the liquidity buffers available to discount with the respective central
banks at the reference date of future estimated cash flows for each of the respective time horizon (3 days or 3 months)
considering the set of transactions intermediated by the market areas, including in this context transactions with
clients of the Corporate and Private networks, which, due to their size, must be quoted by the Trading Room. The
remaining buffer in each time bucket is then compared to the amount of customer deposits, being the indicators
assessed against exposure limits defined in the Bank's regulations.
In parallel, the evolution of the Group’s structural liquidity position is calculated on a regular basis identifying all the
factors that justify the variations that occur. This analysis is submitted to the Capital and Assets and Liabilities
Committee (CALCO) for appraisal, to enable the decision making that leads to the maintenance of financing conditions
adequate to the continuation of the business.
The methodological aspects of the control of liquidity risk are a responsibility of the Risk Commission. This control
includes the regular execution of stress tests, to characterize the Bank's risk profile and to ensure that the Group and
each of its subsidiaries fulfil its obligations in the event of a liquidity crisis. These tests are also used to support the
liquidity contingency plan and management decisions.

| 2022 REPORT & ACCOUNTS

408 |
In 2022, the liquidity positions of BCP, Bank Millennium and BIM reinforced their robustness, based mainly on the
growth of the respective customer deposit bases. This growth was particularly significant in the operation in Portugal,
in which it reached approximately 10%, mainly through the contribution of the retail depositors’ segment. The main
source of financing for the operation in Portugal thus saw its stability reinforced, supporting, as in previous years, a
favourable evolution of the commercial gap.
Accordingly, the regulatory Liquidity Coverage Ratio (LCR), an indicator of short-term liquidity risk, stood at 212% on a
consolidated basis at the end of December 2022 (31 December 2021: 269%), well above the minimum regulatory
requirement of 100%, supported by portfolios of highly liquid assets whose value is compatible with a prudent liquidity
management by the Group.
The regulatory Net Stable Funding Ratio (NSFR), an indicator of structural liquidity risk, increased from 150% on 31
December 2021 to 154% on 31 December 2022, also above the regulatory minimum of 100%, mainly based on the growth
of the customer deposit portfolio.
The loan-to-deposit transformation ratio, another structural indicator of the RAS (calculated in accordance with Bank of
Portugal Instruction no 16/2004, in force), also evolved favourably from a liquidity risk perspective, from 81% on 31
December 2022 to 74% one year later.
It should be noted that, in the annual risk review for 2023, the internal limits for the RAS indicators remained
unchanged facing 2022.
Regarding the presence of the Bank in the debt segment of the capital market, it is worth highlighting the following
events, in chronological order: (i) in May, BCP repaid a covered bond issue in the amount of Euros 1,000,000,000. Given
the Bank's surplus position in terms of liquidity, there was no need to refinance the amount repaid in the market; (ii) in
October, the Bank placed its third issue of senior preferred debt on the market in a 3NC2 format (3 years maturity
callable after 2 years) in the amount of Euros 350,000,000. The operation was aimed at ensuring compliance with the
requirements of “MREL” (Minimum Requirements for Own Funds and Eligible Liabilities), namely the indicative target
that will be in force during 2023, from 1 January. This issue, with a coupon of 8.50% per annum (corresponding to a
spread of 554.7bps over mid-swaps) was carried out in very difficult market conditions, demonstrating the Bank's ability
to access the market even in an adverse and very complex environment; and (iii) in November, and considering that in
view of the prevailing market conditions the Bank had decided not to exercise, in December, the early repayment
option on a T2 issue of Euros 300,000,000, BCP launched an offer to exchange these securities not reimbursed, in the
ratio of 1:1, by others of the same nature, to be issued. Thus, given the non-exercise of the call-option, investors were
offered the option to exchange the bonds they held for newly issued securities with a higher coupon and longer term.
The amount of the new issue 10.25NC5.25 of T2 was set at Euros 133,700,000 and the coupon at 8.75%, per annum,
corresponding to a spread of 605.1bps over mid-swaps.
Still with regard to the funding structure, BCP repaid in advance in December 2022 the first tranche of the Targeted
longer term refinancing operation III (“T LTRO III”), contracted in June 2020 in the amount of Euros 7,550,070,000 (with
the second tranche, amounting to Euros 600,000,000, already repaid in January 2023). Considering the balance in
deposit at the Bank of Portugal and other available liquidity, BCP ended 2022 with a long position on the Eurosystem of
Euros 2,574,146,000.
Throughout 2022, the behaviour of the liquidity buffer at the ECB was mainly determined by the impacts, in opposite
directions, of the aforementioned favourable evolution of the commercial gap, on the one hand and, on the other
hand, of the growth of the margin calls related to derivatives and the decrease of the market price of the assets
eligible for discount with the Eurosystem, effects that showed a growing trend after the outbreak of war in Ukraine.
The combined effect of these and other factors of lesser materiality allowed, nevertheless, the buffer to grow Euros
2,749,283,000 on an annual basis, to Euros 26,520,745,000.

2022 REPORT & ACCOUNTS |

| 409
Likewise, in the year ended December 2022, Bank Millennium and BIM demonstrated the resilience of their liquidity
positions, supported by their retail deposit bases and robust buffers discountable at the respective central banks, with
regulatory and internal indicators of liquidity risk positioned comfortably above the comfort thresholds. In the case of
the operation in Poland, this occurred even considering the effects of the invasion of Ukraine, which resulted in the
significant devaluation of the eligible asset portfolio and the strengthening of derivatives’ margin accounts.
The pool of eligible assets for funding operations in the European Central Bank and other central banks, after haircuts,
is detailed as follows:

| (Thousands of euros)
| 2022 | 2021
European Central Bank | 13,677,518 | 13,394,653
Other Central Banks | 5,213,823 | 4,840,405
| 18,891,341 | 18,235,058

As at 31 December 2022 the gross amount discounted with the European Central Bank amounts to Euros 600,000,000 (31
December 2021: Euros 8,150,070,000). The amount discounted with the Bank of Mozambique amounts to Euros
2,165,000 (31 December 2021: Euros 2,491,000). There are no discounted amounts with other central banks.
The evolution of the ECB’s Monetary Policy Pool, the net borrows at the ECB and liquidity buffer is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Collateral eligible for ECB, after haircuts: |  |
The pool of ECB monetary policy (i) | 13,677,518 | 13,394,653
Outside the pool of ECB monetary policy | 10,269,081 | 12,107,127
| 23,946,599 | 25,501,780
Net borrowing at the ECB (ii) | (2,574,146) | 1,730,318
Liquidity buffer (iii) | 26,520,745 | 23,771,462

i) Corresponds to the amount reported in COLMS (Bank of Portugal application).
ii) Includes as at 31 December 2022 the amount of funding with the ECB (Euros 600,000,000, deducted from interest accrual of T LTRO
III of Euros 7,260,000), deducted from deposits with the Bank of Portugal and other liquidity with the Eurosystem (Euros
3,696,285,000) in excess over the minimum cash reserves (Euros 529,400,000).
iii) Collateral eligible for ECB, after haircuts, less net financing at the ECB.
The Group's counterbalancing capacity is defined by the ability to generate additional liquidity in the short term to deal
with possible situations of financial stress. The measures for its reinforcement are described in the Recovery Plan
which, at 31 December 2022, had a total estimated value for Portugal of Euros 3,750,000,000, arising from the sale of
corporate bonds and commercial paper, securitization of a portfolio of consumer credit and issuance of retained
covered bonds to be mobilized for the ECB's monetary policy pool.
In consolidated terms, the refinancing risk of medium and long-term instruments will remain at very low levels over the
next three years, with annual refinancing needs with no material expression.

| 2022 REPORT & ACCOUNTS

410 |
Encumbered and Unencumbered assets
Within the scope of the European Banking Authority's guidance on the disclosure of encumbered assets and
unencumbered assets, taking into account the recommendation made by the European Systemic Risk Committee, the
following information is presented in accordance with Commission Implementing Regulation (EU) 2021/637 of 15 March
2021 supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to
regulatory technical standards for disclosure of encumbered and unencumbered assets.

|  |  |  |  |  |  | (Thousands of euros)
| 2022 (1)
| Carrying amount of encumbered assets | Fair value of encumbered assets | Carrying amount of unencumbered assets | Fair value of unencumbered assets
|  | of which notionally eligible EHQLA and HQLA (2) |  | of which notionally eligible EHQLA and HQLA (2) |  | of which EHQLA and HQLA (2) |  | of which EHQLA and HQLA (2)
Assets of the disclosing institution | 13,756,969 | 1,091,650 |  |  | 82,775,892 | 25,254,479 |  |
Equity instruments | — | — | — | — | 127,810 | — | 127,810 | —
Debt securities | 1,091,650 | 1,091,650 | 968,647 | 968,647 | 20,604,616 | 15,841,854 | 20,024,958 | 15,227,018
of which: securitisations | — | — | — | — | 29,291 | — | 24,793 | —
of which: issued by general governments | 1,052,101 | 1,052,101 | 930,126 | 930,126 | 15,452,215 | 14,962,526 | 14,877,737 | 14,391,677
of which: issued by financial corporations | — | — | — | — | 1,804,297 | 119,941 | 1,804,289 | 119,941
of which: issued by non- financial corporations | 39,560 | 39,560 | 38,521 | 38,521 | 2,754,650 | 541,928 | 2,754,901 | 541,928
Other assets | 12,793,413 | — |  |  | 61,561,554 | 8,879,947 |  |

(1)Table's figures are calculated by the median of the values disclosed in the regulatory information for the previous 4 quarters.
(2)EHQLA (Set as Extremely High-Quality Liquid Assets) e HQLA (High-Quality Liquid Assets).
Collateral received and own debt securities issued

|  |  | (Thousands of euros)
| 2022 (1)
| Fair value of encumbered collateral received or own debt securities issued | Unencumbered Fair value of collateral received or own debt securities issued available for encumbrance
|  | of which notionally eligible EHQLA and HQLA (2) |  | of which EHQLA and HQLA (2)
Collateral received by the disclosing institution | — | — | 88,857 | 1,502
Debt securities | — | — | 1,502 | 1,502
of which: issued by general governments | — | — | 1,502 | 1,502
Loans and advances other than loans on demand | — | — | 87,393 | —
Own covered bonds and securitisations issued and not yet pledged |  |  | 6,113,493 | —
TOTAL COLLATERAL RECEIVED AND OWN DEBT SECURITIES ISSUED | 13,756,969 | 1,091,650 |  |

(1)Table's figures are calculated by the median of the values disclosed in the regulatory information for the previous 4 quarters.
(2)EHQLA (Set as Extremely High-Quality Liquid Assets) e HQLA (High-Quality Liquid Assets).

2022 REPORT & ACCOUNTS |

| 411
Sources of encumbrance

|  | (Thousands of euros)
Sources of encumbrance | Matching liabilities, contingent liabilities and securities lent | Assets, collateral received and own debt securities issued other than covered bonds and securitisations encumbered
Carrying amount of selected financial liabilities | 10,520,000 | 13,256,892

The table's figures are calculated by the median of the values disclosed in the regulatory information for the previous 4 quarters.
At the end of 2022, and according to the EBA methodology, the total encumbered assets represents 14% of the Group's
total balance sheet assets. The encumbered Loans to customers represents 81% of the total encumbered assets, while
Debt securities represents 8%.
The encumbered assets are mostly related with the Portugal's activity funding operations, namely with the ECB,
securitisation programs and derivatives operations. The type of assets used as collateral for these financing transactions
are different Loans to Customers’ portfolios, supporting securitisation programs and mortgage bonds, intended to
reinforce the collateral pool with the ECB. Regarding the collateralization of derivative operations, as well as financing
operations with the European Investment Bank, is mainly supported by sovereign debt eligible for central banks,
together with bonds issued by public sector companies.
On 31 December 2022, the Other assets includes unencumbered assets in the amount of Euros 8,477,357,000 related to
Loans on demand, the amount of Euros 56,201,560,000 related to Loans and advances other than loans on demand (of
which encumbered assets in the amount of Euros 11,188,611,000) and the amount of Euros 8,601,987,000, mostly
unencumbered and related to the Group’s activity, namely, to: investments in associated companies and subsidiaries,
tangible assets and investment properties, intangible assets, assets associated with derivatives and current and
deferred taxes.
A 31 December 2022, the Group has a Euros 12.5 billion BCP Covered Bond Programme (“BCP Programme”) with Euros
9.2 billion of covered bonds outstanding. The BCP Programme is backed by a Euros 10.6 billion portfolio of residential
mortgages, providing an overcollateralization (“OC”) of 15.4%, which is above the minimum of 14% currently required
by rating agencies.
The Portuguese covered bond legislation affords covered bond holders a dual-recourse, firstly over the issuer, secondly
over the cover pool that may also include other eligible assets, over which they benefit from a special preferential
claim. The Portuguese covered bond legislation ensures total segregation of the covered pool from any future issuer’s
insolvent estate, for the benefit of covered bond holders, who have precedence over claims of any other of the issuer’s
creditors in case of issuer insolvency, thus and to this extent superseding the general insolvency and recovery
legislation. Residential mortgages in a cover pool are subject to certain eligibility criteria inscribed in the Portuguese
covered bond legislation, among them a maximum LTV of 80%, delinquency of no more than 90 days, and them being
first lien mortgages (or, if otherwise, all preceding liens being in the cover pool) over properties located in the EU. The
BCP’s Programme documentation limits property location to Portugal only.

| 2022 REPORT & ACCOUNTS

412 |
The analysis of the balance sheet items by maturity dates is as follows:

|  |  |  |  |  | (Thousands of euros)
| 2022
|  | Up to 3 months | 3 months to 1 year | 1 year to 5 years | Over 5 years | Undetermined maturity |
| At sight | Total
Assets |  |  |  |  |  |  |
Cash and deposits at Central Banks | 6,022,001 | — | — | — | — | — | 6,022,001
Loans and advances to Credit Institutions - Repayable on demand | 213,460 | — | — | — | — | — | 213,460
Other loans and advances (a) | — | 752,913 | 211,383 | — | — | — | 964,296
Loans and advances to customers (a) | — | — | 8,464,759 | 13,639,800 | 33,494,378 | 579,229 | 56,178,166
Other financial assets (b) | — | 777,004 | 1,371,845 | 5,090,680 | 1,049,378 | 491,922 | 8,780,829
| 6,235,461 | 1,529,917 | 10,047,987 | 18,730,480 | 34,543,756 | 1,071,151 | 72,158,752
Liabilities |  |  |  |  |  |  |
Resources from Credit Institutions | — | 499,654 | 87,373 | 881,333 | — | — | 1,468,360
Resources from costumers | 48,673,569 | 14,634,189 | 10,956,260 | 1,106,125 | 60,000 | — | 75,430,143
Debt securities issued | — | 2,008 | — | 852,706 | 627,372 | — | 1,482,086
Subordinated debt | — | — | — | 314,519 | 1,018,537 | — | 1,333,056
| 48,673,569 | 15,135,851 | 11,043,633 | 3,154,683 | 1,705,909 | — | 79,713,645

(a)Gross of impairment
(b)Financial assets at fair value through profit or loss and Financial assets at fair value through other comprehensive income.
Operational Risk
The operational risk management system is framed by the “3 Lines of Defence” Corporate Governance model and is
based on an integrated structure of end-to-end processes, considering that a vision which is transversal to the
functional units of the organisational structure is the most suitable approach for the perception of risks and to estimate
the effects of the corrective measures introduced for their mitigation. Furthermore, these processes model also
underlies other strategic initiatives related to the management of this risk such as the actions to improve operating
efficiency and the management of business continuity. Hence, the most relevant Group subsidiaries have their own
process's structure, which is periodically adjusted according to business evolution, in order to ensure suitable coverage
of the business activities (or business support activities) developed, ensuring thus, the replication of the 3 Lines of
Defence model in the management of operational risk.
The responsibility for the day-to-day processes’ management lies with the 1st Line of Defence: the process owners
(seconded by process managers), whose mission is to characterise the operational losses captured under their
processes, to monitor the respective Key Risk Indicators (KRI), to perform the Risks Self-Assessment (RSA) exercises, as
well as to identify and implement suitable actions to mitigate operational risk exposures, thus contributing to the
strengthening of control mechanisms and the improvement of the internal control environment. The periodic revision of
the main processes in each geography is ensured by local structure units.
The Risk Management function (materialised in the Risk Office) and the Compliance function (materialised in the
Compliance Office) represent the 2nd Line of Defence and are responsible for implementing the risk policy defined for
the Group, proposing and developing approaches for managing this risk, supervising their implementation and
challenging the 1st Line of Defence regarding the risk levels incurred. The Internal Audit function embodies the 3rd Line
of Defence and supervises the appropriate fulfilment of the functions and activities of the remaining two lines of
defence.

2022 REPORT & ACCOUNTS |

| 413
In 2022, the usual operational risk management activities continued to be executed by the various players involved in
the management of this risk, aiming at an efficient and systematic identification, evaluation, mitigation and control of
exposures, as well as at the appropriate reporting tasks, either to the Group’s management bodies or within regulatory
duties. The results of the RSA exercises evidence a robust control environment, demonstrating the Group's commitment
to operational risk management through the continuous development of improvement actions that help mitigate
exposures to this risk. Regarding the operational losses registered, it should be highlighted that their pattern was not
different from what is usual and expected, with a higher frequency of losses of low amounts, without concentration in
significant amounts.
It should also be noted that the last 5-years average of the ratio between gross losses and the relevant indicator for TSA
(gross income) has consistently presented values below 1%, which compares favourably with international benchmarking
and attests the robustness of the operational control environment of the Group. The monitoring of KRI has allowed to
identify opportunities for improvement that, together with the RSA exercises and the process of identification and
registration of losses, provide for an effective management of this risk.
The Bank's mobilisation to reinvent the banking experience, based on the digitization and use of new technologies,
entails relevant challenges in the management of operational risk, which include the reinforcement of the security of
digital banking channels, the reinforcement of mechanisms for the prevention and detection of potential fraud, proper
management of personal data and compliance with the information duties legally provided for in sales through digital
banking channels.
Covenants
The contractual terms of instruments of various wholesale funding instruments encompass obligations assumed by
entities belonging to the Group as borrowers or issuers, concerning general duties of corporate conduct, maintenance
of banking activity and the inexistence of special guarantees constituted for the benefit of other creditors (“negative
pledge”). These terms essentially reflect the internationally adopted standards for each of the types of debt
instruments used by the Group.
The terms of the Group’s participation in securitization operations involving its own assets are subject to mandatory
changes in case the Group stops respecting certain rating criteria. The criteria established in each transaction results
mainly from the existing risk analysis at the moment that the transaction was set, being these methodologies usually
applied by each rating agency in a standardised way to all the securitization transactions involving the same type of
assets.
Regarding the Covered Bond Programs of Banco Comercial Português, there are no relevant covenants related to a
possible downgrade of BCP.

| 2022 REPORT & ACCOUNTS

414 |
Hedge accounting
As at 31 December 2022, the table below includes the detail of the hedging instruments used in the Group's hedging
strategies and accounted at the Balance sheet item - Hedging derivatives:

|  |  | (Thousands of euros)
| 2022
| Hedging instruments
|  | Book value | Change in fair value (A)
Type of hedging | Notional | Assets | Liabilities
Fair value hedge |  |  |  |
Interest rate risk |  |  |  |
Interest rate swaps | 11,962,045 | 27,696 | 7,031 | 309,506
Foreign exchange risk |  |  |  |
Currency and interest rate swap | 431,257 | 2,999 | 18,432 | (717)
| 12,393,302 | 30,695 | 25,463 | 308,789
Cash flows hedging |  |  |  |
Interest rate risk |  |  |  |
Interest rate swaps | 14,559,138 | — | 110,562 | (1,513,397)
Foreign exchange risk |  |  |  |
Currency and interest rate swap | 1,273,663 | 29,008 | 41,975 | (10,527)
| 15,832,801 | 29,008 | 152,537 | (1,523,924)
Total | 28,226,103 | 59,703 | 178,000 | (1,215,135)

(A)Changes in fair value used to calculate the ineffectiveness of the hedge
As at 31 December 2021, the table below includes the detail of the hedging instruments used in the Group's hedging
strategies and accounted at the Balance sheet item - Hedging derivatives:

|  |  | (Thousands of euros)
| 2021
| Hedging instruments
|  | Book value | Change in fair value (A)
Type of hedging | Notional | Assets | Liabilities
Fair value hedge |  |  |  |
Interest rate risk |  |  |  |
Interest rate swaps | 15,464,986 | 74,261 | 28,509 | 127,033
Foreign exchange risk |  |  |  |
Currency and interest rate swap | 347,329 | 12,043 | 121 | (29)
| 15,812,315 | 86,304 | 28,630 | 127,004
Cash flows hedging |  |  |  |
Interest rate risk |  |  |  |
Interest rate swaps | 15,781,769 | 19,617 | 283,335 | (324,922)
Foreign exchange risk |  |  |  |
Currency and interest rate swap | 1,691,525 | 3,138 | 65,008 | (1,241)
| 17,473,294 | 22,755 | 348,343 | (326,163)
Hedging of net investments in foreign entities |  |  |  |
Foreign exchange risk |  |  |  |
Currency and interest rate swap | 153,427 | — | 233 | (1,045)
Total | 33,439,036 | 109,059 | 377,206 | (200,204)

(A)Changes in fair value used to calculate the ineffectiveness of the hedge

2022 REPORT & ACCOUNTS |

| 415
As at 31 December 2022, the table below includes the detail of the hedged items:

|  |  |  |  |  |  | (Thousands of euros)
| 2022
| Hedged items
Type of hedging | Balance sheet item |  |  | Cumulative value of the adjustments | Change in fair value (A) | Cash flow hedge reserve / Currency translation reserve
Book value | Hedging relationships in effect | Hedging relationships discontinued
Assets | Liabilities | Assets | Liabilities
Fair value hedge |  |  |  |  |  |  |  |
Interest rate risk |  |  |  |  |  |  |  |
Interest rate swaps | (B) | 814,689 | — | (71,691) | — | (70,012) | n/a | n/a
| (H) | 1,524,001 | — | (510,086) | — | (181,718) | n/a | n/a
| (C) | 3,437,415 | — | 285,374 | (3,278) | (210,181) | n/a | n/a
| (D) | — | 10,000 | — | 517 | 580 | n/a | n/a
| (E) | — | 12,350 | — | (1,232) | 718 | n/a | n/a
| (F) | — | 1,295,542 | — | (66,860) | 65,881 | n/a | n/a
| (G) | — | 998,066 | — | (72,040) | 67,509 | n/a | n/a
Foreign exchange risk |  |  |  |  |  |  |  |
Currency and interest rate swap |  | — | 431,257 | — | (1,131) | 1,079 | n/a | n/a
|  | 5,776,105 | 2,747,215 | (296,403) | (144,024) | (326,144) | n/a | n/a
Cash flows hedging |  |  |  |  |  |  |  |
Interest rate risk |  |  |  |  |  |  |  |
Interest rate swaps | (B) | 14,558,924 | — | — | — | 1,513,397 | (1,775,249) | 7,644
Foreign exchange risk |  |  |  |  |  |  |  |
Currency and interest rate swap | (B) | 1,273,663 | — | — | — | 11,473 | (20,123) | (280)
|  | 15,832,587 | — | — | — | 1,524,870 | (1,795,372) | 7,364
Total |  | 21,608,692 | 2,747,215 | (296,403) | (144,024) | 1,198,726 | (1,795,372) | 7,364

(A)Fair value changes used to calculate the ineffectiveness of the hedge
(B)Financial assets at amortised cost - Loans and advances to customers
(C)Financial assets at fair value through other comprehensive income
(D)Financial liabilities at amortised cost - Resources from credit institutions
(E)Financial liabilities at amortised cost - Resources from customers
(F)Financial liabilities at amortised cost - Non subordinated debt securities issued
(G)Financial liabilities at amortised cost - Subordinated debt
(H)Debt securities held not associated with credit operations

| 2022 REPORT & ACCOUNTS

416 |
As at 31 December 2021, the table below includes the detail of the hedged items:

|  |  |  |  |  |  | (Thousands of euros)
| 2021
| Hedged items
Type of hedging | Balance sheet item |  |  | Cumulative value of the adjustments | Change in fair value (A) | Cash flow hedge reserve / Currency translation reserve
Book value | Hedging relationships in effect | Hedging relationships discontinued
Assets | Liabilities | Assets | Liabilities
Fair value hedge |  |  |  |  |  |  |  |
Interest rate risk |  |  |  |  |  |  |  |
Interest rate swaps | (B) | 745,328 | — | (1,678) | — | (8,237) | n/a | n/a
| (H) | 4,133,227 | — | (12,706) | — | (20,638) | n/a | n/a
| (C) | 6,574,692 | — | 41,485 | (2,013) | (117,932) | n/a | n/a
| (D) | — | 10,000 | — | 93 | 140 | n/a | n/a
| (E) | — | 12,350 | — | 490 | 311 | n/a | n/a
| (F) | — | 497,998 | — | (985) | 979 | n/a | n/a
| (G) | — | 758,076 | — | (4,530) | 5,754 | n/a | n/a
Foreign exchange risk |  |  |  |  |  |  |  |
Currency and interest rate swap |  | — | 347,329 | — | (66) | 98 | n/a | n/a
|  | 11,453,247 | 1,625,753 | 27,101 | (7,011) | (139,525) | n/a | n/a
Cash flows hedging |  |  |  |  |  |  |  |
Interest rate risk |  |  |  |  |  |  |  |
Interest rate swaps | (B) | 15,781,551 | — | — | — | 324,922 | (263,143) | 131,353
Foreign exchange risk |  |  |  |  |  |  |  |
Currency and interest rate swap | (B) | 1,691,525 | — | — | — | 1,939 | (9,567) | (285)
|  | 17,473,076 | — | — | — | 326,861 | (272,710) | 131,068
Hedging of net investments in foreign entities |  |  |  |  |  |  |  |
Foreign exchange risk |  |  |  |  |  |  |  |
- Bank Millennium, S.A. |  | — | — | — | — | 1,045 | 55,326 | —
|  | — | — | — | — | 1,045 | 55,326 | —
Total |  | 28,926,323 | 1,625,753 | 27,101 | (7,011) | 188,381 | (217,384) | 131,068

(A)Fair value changes used to calculate the ineffectiveness of the hedge
(B)Financial assets at amortised cost - Loans and advances to customers
(C)Financial assets at fair value through other comprehensive income
(D)Financial liabilities at amortised cost - Resources from credit institutions
(E)Financial liabilities at amortised cost - Resources from customers
(F)Financial liabilities at amortised cost - Non subordinated debt securities issued
(G)Financial liabilities at amortised cost - Subordinated debt
(H)Debt securities held not associated with credit operations

2022 REPORT & ACCOUNTS |

| 417
The reconciliation of each equity component and an analysis of other comprehensive income attributable to hedge
accounting, with reference to 31 December 2022 and 2021, is as follows:

|  |  | (Thousands of euros)
| Cash flow hedge reserve | Exchange differences
| 2022 | 2021 | 2022 | 2021
Balance as at 1 January | (141,642) | 262,288 | 55,326 | 56,371
Amounts recognised in other comprehensive income: |  |  |  |
Hedging cash flows |  |  |  |
Changes in fair value of currency and interest rate swaps | (1,523,207) | (326,958) | — | —
Foreign exchange changes | 1,725 | 42 | — | —
Hedge breakage | (123,938) | (75,565) | — | —
Ineffectiveness of coverage recognised in results | 1,333 | 107 | — | —
Others | (2,279) | (1,556) | — | —
Hedging of net investments - foreign exchange risk |  |  |  |
Reclassified to the income statement | — | — | 3,685 | (1,045)
Change in the fair value of settled transactions | — | — | (59,011) | —
Balance at the end of the year | (1,788,008) | (141,642) | — | 55,326

The table below includes information on the effectiveness of hedging relationships, as well as impacts on results and
other comprehensive income, with reference to 31 December 2022:

|  |  |  |  | (Thousands of euros)
| 2022
| Income statement item (A) | Gains/(losses) recognised in Other comprehensiv e income | Hedging ineffectiven ess recognised in Income statement (A) | Amounts reclassified from reserves to results for the following reasons:
| Income statement item (B) | Cash flows that were being hedged (C) | Hedged item with an impact on results
Type of hedging
Fair value hedge |  |  |  |  |  |
Interest rate risk |  |  |  |  |  |
Interest rate swaps | (D) | — | (17,717) |  | — | —
Foreign exchange risk |  |  |  |  |  |
Currency and interest rate swap | (D) | — | 362 |  | — | —
|  | — | (17,355) |  | — | —
Cash flows hedging |  |  |  |  |  |
Interest rate risk |  |  |  |  |  |
Interest rate swaps | (D) | (66,333) | (238) | (E) | 54,861 | —
Foreign exchange risk |  |  |  |  |  |
Currency and interest rate swap | (D) | (15,838) | (1,333) |  | — | —
|  | (82,171) | (1,571) |  | 54,861 | —
Total |  | (82,171) | (18,926) |  | 54,861 | —

(A)Income Statement item in which the ineffectiveness of the hedge was recognised
(B)Income Statement item in which the reclassified amount was recognised
(C)but which are no longer expected to occur
(D)Net gains/(losses) from hedge accounting operations
(E)Interest income
(F)Net gains/(losses) from foreign exchange

| 2022 REPORT & ACCOUNTS

418 |
The table below includes information on the effectiveness of hedging relationships, as well as impacts on results and
other comprehensive income, with reference to 31 December 2021:

|  |  |  |  | (Thousands of euros)
| 2021
| Income statement item (A) | Gains/(losses) recognised in Other comprehensiv e income | Hedging ineffectiveness recognised in Income statement (A) | Amounts reclassified from reserves to results for the following reasons:
| Income statement item (B) | Cash flows that were being hedged (C) | Hedged item with an impact on results
Type of hedging
Fair value hedge |  |  |  |  |  |
Interest rate risk |  |  |  |  |  |
Interest rate swaps | (D) | — | (12,590) |  | — | —
Interest rate futures | (D) | — |  |  | — | —
Foreign exchange risk |  |  |  |  |  |
Currency and interest rate swap | (D) | — | 69 |  | — | —
|  | — | (12,521) |  | — | —
Cash flows hedging |  |  |  |  |  |
Interest rate risk |  |  |  |  |  |
Interest rate swaps | (D) | (72,809) | (699) | (E) | 68,038 | —
Foreign exchange risk |  |  |  |  |  |
Currency and interest rate swap | (D) | (6,156) | (107) |  | — | —
|  | (78,965) | (806) |  | 68,038 | —
Hedging of net investments in foreign entities |  |  |  |  |  |
Foreign exchange risk | (F) |  |  |  |  |
Currency and interest rate swap | (1,045) | — |  | — | —
Total |  | (80,010) | (13,327) |  | 68,038 | —

(A)Income Statement item in which the ineffectiveness of the hedge was recognised
(B)Income Statement item in which the reclassified amount was recognised
(C)but which are no longer expected to occur
(D)Net gains/(losses) from hedge accounting operations
(E)Interest income
(F)Net gains/(losses) from foreign exchange

2022 REPORT & ACCOUNTS |

| 419
The table below shows the detail of hedging instruments, as at 31 December 2022, by maturity:

|  |  |  |  | (Thousands of euros)
| 2022
| Remaining period | Fair value
Type of hedging | Up to 3 months | 3 months to 1 year | Over 1 year | Total | Assets | Liabilities
Fair value hedging derivatives related to |  |  |  |  |  |
interest rate risk changes: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Interest rate swaps |  |  |  |  |  |
Notional | 293,467 | 377,114 | 11,291,464 | 11,962,045 | 27,696 | 7,031
Fixed interest rate (average) | 1.05% | 1.44% | 2.44% | 2.38% |  |
Fair value hedging derivatives related to currency risk changes |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Currency and interest rate swap | 98,439 | 332,818 | — | 431,257 | 2,999 | 18,432
Cash flow hedging derivatives related to |  |  |  |  |  |
interest rate risk changes: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Interest rate swaps | 240,409 | 278,751 | 14,039,978 | 14,559,138 | — | 110,562
Cash flow hedging derivatives related to |  |  |  |  |  |
currency risk changes: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Currency and interest rate swap | 153,720 | 685,365 | 434,578 | 1,273,663 | 29,008 | 41,975
Total derivatives traded by |  |  |  |  |  |
OTC Market: | 786,035 | 1,674,048 | 25,766,020 | 28,226,103 | 59,703 | 178,000

The table below shows the detail of hedging instruments, as at 31 December 2021, by maturity:

|  |  |  |  | (Thousands of euros)
| 2021
| Remaining period | Fair value
Type of hedging | Up to 3 months | 3 months to 1 year | Over 1 year | Total | Assets | Liabilities
Fair value hedging derivatives related to |  |  |  |  |  |
interest rate risk changes: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Interest rate swaps |  |  |  |  |  |
Notional | 342,503 | 1,076,631 | 14,045,852 | 15,464,986 | 74,261 | 28,509
Fixed interest rate (average) | 1.54% | 0.57% | 0.25% | 0.30% |  |
Fair value hedging derivatives |  |  |  |  |  |
related to currency risk changes |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Currency and interest rate swap | 171,466 | 175,863 | — | 347,329 | 12,043 | 121
Cash flow hedging derivatives related to |  |  |  |  |  |
interest rate risk changes: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Interest rate swaps | — | 174,524 | 15,607,245 | 15,781,769 | 19,617 | 283,335
Cash flow hedging derivatives related to |  |  |  |  |  |
currency risk changes: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Currency and interest rate swap | 210,017 | 160,365 | 1,321,143 | 1,691,525 | 3,138 | 65,008
Hedging derivatives related to |  |  |  |  |  |
net investment in foreign operations: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Currency and interest rate swap | 153,427 | — | — | 153,427 | — | 233
Total derivatives traded by |  |  |  |  |  |
OTC Market: | 877,413 | 1,587,383 | 30,974,240 | 33,439,036 | 109,059 | 377,206

| 2022 REPORT & ACCOUNTS

420 |
Climate risks - Integration of ESG Factors in Risk Management
In its risk classification, Millennium BCP recognises the ESG category which includes factors associated with the climate
and environmental components, and also with social and governance aspects.
These factors are not considered separately; in fact, they are seen as elements likely to affect positively or negatively
the financial performance and solvency of the Bank's customer’s and counterparties. This way, the materialisation of
their impacts occurs by means of the “traditional” categories: credit risk, market risk, operational & reputation risk,
liquidity and financing risks.
Within this context, and with the purpose of promoting the integration of ESG factors in risk management, the Bank
implemented a set of processes and methodologies to identify, assess, manage and monitor the impact of the ESG
category in overall risk, in accordance with the framework and policies already established for the remaining financial
and non-financial risks.
Governance Model
The governance model for risks arising from ESG factors follows a structure based on three lines of defence which,
under the leadership of the Board of Directors (and respective delegations on the Executive Committee), ensure its
adequate assessment and management.
The first-line functions comprise all the departments and business areas that interact with the Bank’s customers,
counterparties and suppliers, collect the information and data that support the assessment of their risk profiles (and of
their respective operations) and structure the commercial solutions with characteristics associated with the ESG or with
the promotion of control of their impacts on the Bank's risk profile.
Between the first and second lines of defence, the role of the Sustainability Function is established, whose
responsibilities include a) the overall management of the sustainability strategy and plans of Millennium BCP and of its
financial group; b) the direct orientation and operational support to the first and second lines of defence in the
performance of their main responsibilities; c) the development of policies, methodologies and reports that address ESG
issues; and d) the management of commitments and external communications by the Bank and the Group in this area.
In the second line of defence, the responsibility for risk control, is assumed by the Risk Office and by the Compliance
Office. These functions ensure the procedures for the design, implementation of the policies/methodologies/ risk
management models, which are paramount in keeping the risk profile of the Group in appropriate levels.
Among other, these responsibilities, include:
•Integrate the ESG dimension in risk appetite (Risk Appetite Framework - RAF);
•Develop and maintain the methodologies necessary for risk assessment and management;
•Carry out stress tests focused on climate and environmental risk factors;
•Introduce the ESG dimension in capital and liquidity adequacy exercises;
Specifically in terms of compliance, we emphasise the following controls:
•Compliance with regulations relating to sustainability and risk management arising from ESG factors;
•Quality in the external reporting and disclosure of information;
•Design and labelling of the commercial and investment products;
•Incorporation of ESG related requirements and conditions in the Bank’s contracts;
•Prevention of conflicts of interest in the provision of services and products related with ESG.
The third line of defence assumes responsibility for the independent review of all ESG aspects through the annual work
plans of the Internal Audit Function.

2022 REPORT & ACCOUNTS |

| 421
Identification of ESG risks
Climate changes and environmental degradation factors are elements that potentially affect economic activity. These
alterations may include factors related with issues such as climate changes (mitigation, and adaptation), sustainable
use and protection of hybrid and marine resources, transition towards a circular economy, prevention and control of
pollution, protection and restoration of biodiversity.
The materialisation of these risks fundamentally stems from the exposure of Millennium BCP's banking portfolio to
customers, counterparties and invested assets whose performance may be affected or contribute to the negative
impacts of climate change and other environmental factors.
These factors may generate negative financial impacts which are identified and assessed by means of two main
dimensions:
•Physical risks: arising from the physical effects of climate change and environmental degradation. They should be
categorized as a) severe risks, if they arise from extreme weather events such as fires, floods or droughts; b) chronic
risks, if they arise from progressive changes in weather and climate patterns or from a gradual loss of natural
ecosystems.
•Transition risks: are the risks of any negative financial impact arising from the effort, in progress or to happen in the
future, of transition into a low-carbon and environmentally sustainable economy. These may result, for example,
from technological changes, the impact of public policies or behavioural changes in terms of demand for goods or
services (including banking services).
The materialisation of social risks is also assessed, considering the issues related with rights, well-being and interests of
persons and communities and include factors such as (in)equality, health, diversity, inclusion, labour relations,
workplace health and safety, human capital and communities.
In addition, the governance risk factors are also identified by Millennium BCP, through issues relating to leadership,
management and prevention of conflicts of interest, quality of internal control and independent reviews/auditing,
transparency and good tax practices, for example.
A methodology for assessing the materiality of ESG risks was developed in order to determine the potential impact of
those risks on the Bank’s profile.
Management and monitoring principles
ESG risks management and respective strategy follows a different logic compared to 'traditional' risks, which are based
on short-term timeframes. In contrast, the materialization of ESG risks is expected to occur over extended timeframes,
which is why the establishment of strategy and risk appetite follows different timeframes. For example, if the
assessment of physical (severe) risks can determine an action strategy more focused on the short term (e.g.,
considering the establishment of additional mitigation measures, at the level of policies for granting credit and
insurance policy), the transition risks justify a more structural approach, based on collecting information, evaluating
customers and monitoring their performance over time.
From this perspective, Millennium BCP's management of ESG impacts follows the following principles:
•Establishment of a responsible corporate financing policy, which excludes or conditions the Group's operations in
sectors and/or activities with greater environmental and social impact.
•Integration of the strategy for managing risks arising from ESG factors into the Bank's global sustainability plan, which
steers the integration of the ESG dimension into business processes, establishing goals, timelines and a model for
controlling proper observance.

| 2022 REPORT & ACCOUNTS

422 |
•Transparent communication: the Bank publicly discloses its sustainability and ESG impact management goals and key
practices, allowing all stakeholders to evaluate the robustness of its approach, including its exposure to ESG risks.
•Regular monitoring of exposure to risks arising from ESG factors through the management information routines
already established for each of the risk categories.
•Internal standardisation of ESG references, through a corporate taxonomy that allows the identification and
classification of the exposures that are proven to have characteristics that promote the transition of the Portuguese
and European economy.
•Focus on credit risk management, through models that promote the integration of the ESG dimension in the risk
assessment of the Bank's main companies/customers, ensuring that business decisions include an assessment of the
main impacts of ESG factors.
•Information gathering and structuring, using public sources and information provided directly by customers, as a
means of improving knowledge of customers' environmental performance and the possible financial impacts
associated with any limitation on this performance.
The implementation of these principles, in turn, is promoted through an internal policy of management of the risks
arising from ESG factors, which establishes the following main risk tools:
•Regular assessment of the materiality of the risks arising from ESG factors that allows confirming the alignment with
the risk appetite and the need to implement mitigation actions;
•Risk assessment methodologies arising from ESG factors integrated in the credit risk assessment models;
•Risk classification methodologies at portfolio level, enabling the identification of sectors, companies and exposures
more susceptible to transition and/or physical risks;
•Quantification models for financed GHG emissions, promoting strategic discussion regarding the management of these
emissions and their alignment (in time) with the Paris Agreement targets;
•Sensitivity analyses and stress tests focusing on climate risks.
Stress testing with a focus on climate risk
The Bank uses methodologies for analysing sensitivity and conducting stress tests to the risks arising from ESG factors
(with a focus on the climate risk component).
Considering the ESG risk materialisation horizons, this is an important risk management technique, which allows
assessing the impacts of climate change (and respective scenarios) on the financial variables that affect the value of
Millennium BCP's banking portfolio.
Based on its results, new risk exposures may be identified that require the Bank to take additional management
measures to mitigate the impacts of climate risks.

2022 REPORT & ACCOUNTS |

| 423
55.Mozambique's sovereign debt
Following a period of deceleration in economic activity and increase of inflation, reduction of Republic of Mozambique
rating, depreciation of Metical and decrease in foreign direct investment, the Bank of Mozambique has adopted a
restrictive policy, with increases in the reference rate since December 2015, as well as increasing the reserve ratio.
This set of factors constrained commercial banking in Mozambique, pushing it to pursue a strict liquidity management,
emphasis on raising funds, despite contributing to the improvement of net interest income.
According to an International Monetary Fund (IMF) statement dated 23 April 2016, existing debt guaranteed by the State
of Mozambique in an amount over USD 1 billion that had not been disclosed to the IMF. Following this disclosure, the
economic program supported by the IMF was suspended. According to an IMF statement dated 13 December 2016,
discussions were initiated on a possible new agreement with the Government of Mozambique and the terms of
reference for an external audit were agreed.
In June 2017, the Attorney General's Office of the Republic of Mozambique published an Executive Summary regarding
the above-mentioned external audit. On 24 June 2017, the IMF released in a statement that due to the existence of
information gaps in this audit, an IMF mission would visit the country to discuss audit results and possible follow-up
measures. Following this visit, the IMF requested the Government of Mozambique to obtain additional information on
the use of the funds.
On 14 December 2017, in a statement from the IMF staff, after the end of the mission held between 30 November and
13 December 2017, it was reiterated the need for the Mozambican State to provide missing information. In the
statement of the Mozambican Attorney General's Office dated 29 January 2018, it is mentioned, among other things,
that the Public Prosecutor submitted to the Administrative Court, on 26 January 2018, a complaint regarding the
financial responsibility of public managers and companies participated by the State, participants in the execution and
management of contracts for financing, supplying and providing services related to debts not disclosed to the IMF.
In the statements dated of 16 January 2017 and 17 July 2017, the Ministry of Economy and Finance of Mozambique
informed the holders of bonds issued by the Republic of Mozambique specifically "US$726.524 million, 10.5%, repayable
securities in 2023" that the interest payment due on 18 January 2017 and 18 July 2017, would not be paid by the
Republic of Mozambique. In November 2018, the Ministry of Economy and Finance of the Republic of Mozambique
announced that it has reached an agreement in principle on the key commercial terms of a proposed restructuring
transaction related to this debt securities with four members of the Global Group of Mozambique Bondholders. The
Bondholders currently own or control approximately 60% of the outstanding Bonds. The agreement in principle reached
by the parties, and the support of the Bondholders for the proposed restructuring, is conditional on the parties reaching
an agreement on mutually satisfactory documentation setting out the detailed terms of the restructuring including
implementation, and the mentioned Ministry obtaining all necessary approvals, including Parliamentary and government
approvals of Mozambique.
On 6 September 2019, the Ministry of Economy and Finance of the Republic of Mozambique announced the approval by
99.95% of the Bondholders of a written decision containing the terms and conditions of the restructuring proposal. The
Group has no exposure to this debt.
In May 2020, the Constitutional Council of the Republic of Mozambique issued a Judgment, declaring the nullity of the
acts related with the loans contracted by Proindicus, SA ("Proindicus") and Mozambique Asset Management, MAM, SA
("MAM"), and the respective sovereign guarantees granted by the Government in 2013 and 2014, respectively, and on 19
October 2020, the dissolution of the two companies was registered based on an order issued by the Judicial Court of the
City of Maputo.
In the context of the liquidation of Proindicus and MAM, the Liquidator published, on 3 May 2022, an announcement in
the Jornal de Notícias de Moçambique, through which the creditors of those companies are notified to submit, within
thirty days counted from the said publication, the supporting documents of their credits. Following the publication of
the said announcement, BIM and BCP submitted, on 1 June 2022, their credit claims on Proindicus and MAM,
respectively.

| 2022 REPORT & ACCOUNTS

424 |
An action brought on 27 February 2019 and amended on 30 April 2020, by the Republic of Mozambique (represented by
the Attorney General of the Republic) against the arranger and originating lender of the loan to Proindicus and other
entities, by which the Republic of Mozambique requests, inter alia, the declaration of nullity of the sovereign
guarantee of the Mozambican State to the Proindicus loan. Following this lawsuit, on 27 April 2020, the Banco
Internacional de Moçambique (BIM) filed a lawsuit, in the London Commercial Court, against the arranger and lender of
the loan to Proindicus, claiming, inter alia, payment of BIM's exposure to the Proindicus, in the event that the said
sovereign guarantee of the State of Mozambique to Proindicus is, in a court of law declared null and void. Considering
the dependency of this claim in relation with the lawsuit brought by the Republic of Mozambique above mentioned, it is
expected that the judgment sessions of the claim brought by BIM will only take place simultaneously or after the
judgment sessions scheduled for the beginning of October 2023, relating to the lawsuit filed by the Republic of
Mozambique.
Regarding MAM, as far as we are aware, no lawsuit with the same purpose was brought by the Republic of Mozambique
at the London Commercial Court. However, it is expected that, in the context of ongoing legal proceedings, that
several creditors of MAM (including BCP) have filed, at the London Commercial Court, against MAM and the Republic of
Mozambique in order to recover their credits, the question of the validity of the sovereign guarantee of the
Mozambican State to the MAM loan will be raised by the Republic of Mozambique. In July 2021, London Commercial
Court decided that the various lawsuits brought by several creditors of MAM (including BCP) against the Republic of
Mozambique, as guarantor, and MAM, as debtor, as well as the lawsuit brought by the Republic of Mozambique within
the scope of the loan to Proindicus, must be judged through a unitary trial and scheduled the start of the respective
trial sessions for 3 October 2023 and several interim sessions related to the process of collecting and disclosure of
evidence (DRD - Disclosure Review Documents), which is still ongoing.
According to public information made available by the IMF, there are defaults on credits granted to non-state
Mozambican companies' and guaranteed by the Mozambican State. Considering the above-mentioned developments
related to these credits, although the Ministry of Economy and Finance of the Republic of Mozambique has submitted in
November 2018 new proposals regarding this matter and interactions are ongoing between the Government of
Mozambique, the IMF and the creditors with the objective of finding a solution to the aforementioned debt guaranteed
by the State of Mozambique, which had not been previously disclosed to the IMF, a solution that changes the ex-
approved a solution that would change the Group's current expectations, reflected in the financial statements as at 31
December 2022, on: (i) the ability of the Government of Mozambique and public companies to repay their debts and
commitments assumed; and (ii) the development of the activity of its subsidiary Banco Internacional de Moçambique
(BIM).
As at 31 December 2022, considering the 66.7% indirect investment in BIM, the Group's interest in BIM's equity
amounted to Euros 347,559,000 (31 December 2021: Euros 372,708,000), with the exchange translation reserve
associated with this participation, accounted in Group's consolidated equity, in a negative amount of Euros 139,373,000
(31 December 2021: negative amount of Euros 162,561,000). BIM's contribution to consolidated net income for 2022,
attributable to the shareholders of the Bank, amounts to Euros 70,707,000 (2021: Euros 63,729,000).
As at 31 December 2022, the subsidiary BIM's exposure to the State of Mozambique and to the Central Bank includes
public debt securities denominated in Metical classified as Financial assets measured at amortised cost - Debt
instruments in the gross amount of MZN 57,909,918,000 corresponding to Euros 849,306,000 (31 December 2021: MZN
72,710,220,000 corresponding to Euros 997,397,000) and Financial assets at fair value through other comprehensive
income in the gross amount of MZN 7,172,774,000 corresponding to Euros 105,196,000 (31 December 2021: MZN
4,359,808,000 corresponding to Euros 59,805,000).
Additionally, the Group has also registered as at 31 December 2022, in the balance Loans and advances to customers, a
direct gross exposure to the Mozambican State in the amount of MZN 19,081,523,000 corresponding to Euros
279,849,000 (31 December 2021: MZN 20,380,268,000 corresponding to Euros 279,567,000) and in the balance
Guarantees granted revocable and irrevocable commitments, an amount of MZN 4,818,871,000 corresponding to Euros
70,704,000 (31 December 2021: MZN 6,318,155,000 corresponding to Euros 86,904,000).

2022 REPORT & ACCOUNTS |

| 425
56.Contingent liabilities and other commitments
In accordance with accounting policy 1.U3, the main contingent liabilities and other commitments under IAS 37 are the
following:
1. In 2012, the Portuguese Competition Authority ("PCA") initiated an administrative proceeding relating to competition
restrictive practices (no. PRC 2012/9). On 6 March 2013, unannounced inspections were conducted in the premises of
Banco Comercial Português, S.A. ("BCP" or "Bank") and other credit institutions, where documentation was seized to
investigate allegations of a commercially sensitive information exchange between Portuguese banks.
The administrative proceeding was subject to judicial secrecy by the PCA, as the publicity of the process would not be
compatible with the interests of the investigation and with the rights of the investigated companies. On 2 June 2015,
the Bank was notified of the PCA’s statement of objections (“SO”) in connection with the administrative offence no.
2012/9, by which the Bank is accused of participating in a commercially sensitive information exchange between other
fourteen banks related to retail credit products, namely housing, consumer and small and medium enterprises credit
products.
The proceedings, including the deadline to submit a response to the SO, were suspended for several months between
2015 and 2017, following the appeals lodged by some defendants (including the Bank) before the Portuguese
Competition, Regulation and Supervision Court (“Competition Court”) on procedural grounds (namely, on the right to
have access to confidential documents which were not used as evidence by the Authority – for several months, the PCA
denied the Defendant’ right to have access to confidential documents not used as evidence). In the end of June 2017,
the suspension on the deadline to reply to the SO was lifted.
On 27 September 2017, BCP submitted its reply to the statement of objections. A non-confidential version of the Bank’s
defense was sent to the PCA, at the latter’s request, on 30 October 2017. The witnesses indicated by the Bank were
interrogated by the PCA in December 2017 (although without the presence of BCP’s legal representatives).
In May 2018, the PCA refused the BCP’s application for confidential treatment of some of the information in the Bank’s
reply to the SO, having also imposed that the Bank protects the confidential information of the co-defendants
(providing a summary of the information). On 1 June 2018, the Bank filed an appeal with the Competition Court, which,
upholding the appeal, concluded that the PCA infringed on the right to a prior hearing. Complying with the judgment,
in November 2018, the PCA notified the Bank of its intention to deny the application for confidential treatment of some
of the information included in the Bank’s defence; subsequently, in January 2019, it requested BCP to provide
summaries for the co-defendants’ confidential information. The Bank filed an appeal before the Competition Court,
which ruled in favor of BCP, as it considered that the elaboration by the Bank of summaries for its co-defendants’
confidential information an illegitimate burden.
In April 2019, at the PCA’s request, BCP declared to be in favor of the re-examination of its witnesses, requested in its
defense and previously held. The witnesses were re-inquired on 16-17 April 2019 with the presence of the Bank’s legal
representatives.
The PCA denied the request of BCP to be allowed to conduct cross-examination of the witnesses appointed by its co-
defendants. The Bank appealed to the Competition Court, which denied the appeal, through a decision which was latter
upheld by the Lisbon Court of Appeal. BCP then lodged an appeal before the Portuguese Constitutional Court for breach
of the constitutional right of defence. The Constitutional Court dismissed the appeal on 29 April 2021, on the grounds
that the requested cross-examination was not required by the Portuguese Constitution, at that stage of the
proceedings. On 12 August 2020, the Bank lodged a complaint before the European Court of Human Rights on this
matter.
On 2 July 2019, the Bank submitted its observations to the PCA’s report on complementary evidence measures.

| 2022 REPORT & ACCOUNTS

426 |
On 3 June 2019, BCP was notified of the partial dismissal of the complementary evidence measures it had requested in
its reply to the SO, which it judicially contested. By judgment of September 2019, the Competition Court declared the
nullity of the PCA’s decision, for breach of the right of the parties to be heard on the PCA’s draft decision. The Bank
appealed to the Lisbon Court of Appeal in what concerned the limitation by the Competition Court of the effects of the
nullity declaration of the PCA’s decision. Although this appeal was ultimately admitted by the panel of judges of the
Lisbon Court of Appeal, it ends up being denied.
In order to give compliance to BCP’s right to be heard, the PCA notified the BCP of its intention to reject the above-
mentioned complementary evidence measures. Following BCP’s observations in November 2019, the PCA adopted its
final decision rejecting the measures, which was judicially contested by the BCP in December 2019. In March 2020, the
Competition Court rejected the appeal. This judgment was upheld by the Lisbon Court of Appeal in October 2020.
On 9 September 2019, the PCA adopted its final decision in this proceeding, fining the Bank in a Euros 60 million fine
for its alleged participation in an information exchange system with its competitors in the housing, consumer and SME
credit segments. The BCP considers that the Decision contains serious factual and legal errors, having, on 21 October
2019, filed an appeal before the Competition Court requesting the annulation of the Decision and the suspensory effect
of the appeal. On 8 May 2020, BCP’s appeal was admitted. On 8 June 2020, the BCP submitted a request before the
Court, claiming that the rule according to which appeals do not have, in principle, suspensory effect violates the
Portuguese Constitution, submitting elements aimed at demonstrating considerable harm in the advance provisional
payment of the fine, and offering a guarantee in lieu (indicating the respective percentage of the fine to be offered as
a guarantee). On 14 December 2020, a hearing was held before the Competition Court, and a consensual solution was
reached between the PCA and the defendant banks, including BCP, as to the dosimetry (i.e., 50% of the amount of the
fine) and the forms of the guarantee to be provided, in order for the appeal of the PCA’s decision to have suspensory
effect. On 21 December 2020, BCP submitted a bank guarantee issued by the BCP, which was accepted by the
Competition Court. On 1 March 2021, the Competition Court notified BCP that the guarantee had been presented in a
timely manner and in the agreed form, and, as a result, attributed suspensory effect to the appeal. By order of 20
March 2021, the Competition Court lifted the judicial secrecy and informed the appellants that the trial would, in
principle, start in September 2021.
On 9 July 2020, the BCP requested the Court to declare the nullity of the fining decision of the PCA for failure to assess
the economic and legal context, as determined by the recent case-law of the Court of Justice of the European Union.
The Competition Court clarified that this and other prior questions would not be assessed before the hearing phase.
On 13 January 2021, BCP was notified of an application submitted by "Associação Ius Omnibus – Nova Associação de
Consumidores" to the Competition Court asking it to have access to a non-confidential version of the file, based on the
need to assert the “rights to indemnification of the consumers whose rights and interests it represents, and the possible
exercise and proof of those rights in the context of an action for damages”. On the same date, BCP was notified by the
Competition Court of its decision authorizing the news agency "Lusa" to access the file of the administrative phase of
the case. BCP appeal of this decision to the Appeal Court of Lisbon, on 25 January 2021 and opposed to the request of
"Ius Omnibus" on 2 February 2021.
On 20 March 2021, the Competition Court determined: (i) the lifting of the judicial secrecy; (ii) the forwarding to the
Public Prosecutor of the appeal of BCP against the decision of the Competition Court relating to "Lusa", for reply; (iii)
the provisional start date of the judgement hearing on September 2021, having requested suggestions by the co-
appellants for venues.
By decision of 9 April 2021 of the Competition Court, a preparatory hearing took place on 30 April 2021 for discussion of
issues precedent to the begging of the judgment hearings, in which the procedures relating to the treatment of
confidential information of the co-appellants in the appeals was defined, as well as the conditions relating to access to
file. The Competition Court also set forth preliminary dates for the judgement hearing and scheduled a preparatory
hearing for 7 July 2021.
On 28 June 2021, BCP was notified by the Competition Court to reply to the requests submitted by some of the co-
appellants and confirm that all confidential information had been duly eliminated from non-confidential versions
submitted by each co-appellant. The Competition Court also determined that the hearing of 7 July 2021 was cancelled
and its object would be transferred to the next hearing date (6 September 2021).

2022 REPORT & ACCOUNTS |

| 427
On 8 July 2021, BCP presented its reply to the notification of 28 June 2021, having also requested confirmation in
relation to the scheduling of the judgement hearing, namely confirmation of whether it was actually scheduled for 6
September 2021 the preparatory hearing and the start of the judgement hearing sessions.
Several representatives of the banks raised the question of the possible unconstitutionality of the seizure proceedings
of e-mail messages used as evidence in the PCA’s decision, which objection appeal will now take place. This issue was
raised bearing in mind the recent Decision of the Constitutional Court no. 687/2021 on the administrative offence case
no. 225/15.4YUSTR-W. A petition on this matter was filed with the Court on 10 October 2021, requesting the Court to
take a position on the matter before the beginning of the trial. The Court issued an order rejecting the banks' request
to rule on those nullities raised by them, having refused to prohibit the use during the judgment of electronic messages
seized, allowing witnesses to be confronted with their content. The requesting banks lodged an appeal against this
order, which was admitted by the Lisbon Court of Appeal.
On 28 April 2022, TCRS ("Tribunal da Concorrência, Regulação e Supervisão") handed down a decision under the scope
of Proc. 225/15.4YUSTR-W, regarding the appeal to challenge the decision of the Portuguese Competition Authority of
September 2019 (PRC/2012/09), which imposed fines on a number of banking institutions for alleged violation of
competition rules in virtue of participating in a process of exchanging information on mortgage loans, consumer credit
and credit to SMEs.
In this extensive decision, TCRS lists the facts given as proven, bearing in mind the testimonial evidence produced and
the documents attached to the case file, both in the administrative phase and in the trial, however, at this stage, the
TCRS does not yet conclude by the legal framework of the facts as proven, nor, consequently, by the imposition of
fines, having the TCRS instead chosen to make the reference for a preliminary ruling to the Court of Justice of the
European Union (CJEU) in order to answer two preliminary questions that it sets out, requesting that this reference
follows further terms in the form of an accelerated procedure, taking into account the risk of prescription. It should be
noted that it is not up to the CJEU to adjudicate on the case, but only to interpret the rules of community law by
answering in abstract to the questions submitted to it by the referring court.
CJEU rejected TCRS's request for an accelerated procedure and for priority to be given in the assessment of this case,
hence CJEU's assessment must be given within the normal deadline for these prejudicial proceedings, after which the
judgment of this Court will then be concluded.
The Bank has been notified by the CJEU to, if it wishes, submit its written observations, and must do so by 2 September
2022.
The Bank forwarded its observations to the CJEU on 1 September 2022.
The Bank does not anticipate that this lawsuit may result in any responsibility that could have impact on the respective
financial statements.
2. On 7 June 2022, the Bank was notified by the Court to contest a lawsuit brought by Fundação José Berardo and José
Manuel Rodrigues Berardo against Banco Comercial Português, S.A., Caixa Geral de Depósitos, S.A., Novo Banco, S.A.
and Banco Espírito Santo, S.A., in liquidation.
In this lawsuit, the Plaintiffs allege that they incurred in a mistake regarding the endogenous situation of the defendant
banks and the financial system, without which they would have sold the pledged shares and paid their loans. If this is
not the case, the plaintiffs request the defendant banks to be ordered to pay compensation to Fundação José Berardo
for damages caused by breach of contract, since the moment when they should have been sold in execution of the
pledge due to failure to verify coverage ratios until the moment when they were sold, that is, the difference between
the price at which the pledged shares would have been sold on the dates of coverage ratios default and the price at
which they were actually sold, plus interest and all other loan charges since those dates, in any case the global amount
of compensation not being less than Euros 800,000,000. In any case, the plaintiffs ask the defendant banks to be jointly
condemned to pay José Manuel Rodrigues Berardo compensation for moral damages, in the already calculated amount
of Euros 100,000,000 and also in the amount that is settled as soon as the full extent of the damages is known.

| 2022 REPORT & ACCOUNTS

428 |
In the meantime, through Order No. 8765/2022 of Mr. Secretary of State for the Presidency of the Council of Ministers,
published in Republic Diary, Series 2, part C, of 19 July 2022, the Plaintiff of this lawsuit, Fundação José Berardo, was
declared extinct.
The lawsuit was contested on 27 September 2022 and is awaiting subsequent terms.
The Bank does not anticipate that this lawsuit may result in any responsibility that could have impact on the respective
financial statements.
3. On 3 January 2018, Bank Millennium received decision of the Chairman of the Office for Protection of Competition
and Consumers (OPCC), in which the OPCC Chairman found infringement by Bank Millennium of the rights of consumers.
In the opinion of the OPCC Chairman the essence of the violation is that Bank Millennium informed consumers (it
regards 78 agreements) in responses to their complaints, that the court verdict stating the abusiveness of the provisions
of the loan agreement regarding exchange rates does not apply to them. According to the position of the OPCC
Chairman the abusiveness of contract’s clauses determined by the court in the course of abstract control is
constitutive and effective for every contract from the beginning. As a result of the decision, Bank Millennium was
obliged to:
1) send information on the UOKiK’s decision to the said 78 clients;
2) place the information on decision and the decision itself on the website and on Twitter;
3) to pay a fine amounting to PLN 20.7 million (Euros 4.42 million).
Bank Millennium lodged an appeal within the statutory time limit.
On 7 January 2020, the first instance court dismissed Bank Millennium's appeal in its entirety. Bank Millennium appealed
against the judgment within the statutory deadline. The court presented the view that the judgment issued in the
course of the control of a contractual template (in the course of an abstract control), recognizing the provisions of the
template as abusive, determines the abusiveness of similar provisions in previously concluded contracts. Therefore, the
information provided to consumers was incorrect and misleading. As regards the penalty imposed by OPCC, the court
pointed out that the policy of imposing penalties by the Office had changed in the direction of tightening penalties and
that the court agrees with this direction.
In Bank Millennium's assessment, the Court should not assess Bank Millennium's behaviour in 2015 from the perspective
of today's case-law views on the importance of abstract control (it was not until January 2016 that the Supreme Court's
resolution supporting the view of the OPCC Chairman was published), the more penalties for these behaviours should
not be imposed using current policy. The above constitutes a significant argument against the validity of the judgment
and supports the appeal which Bank Millennium submitted to the Court of second instance.
The second instance court, in its judgment of 24 February 2022, completely revoked the decision of the OPCC
Chairman. On 31 August 2022, the OPCC Chairman lodged a cassation appeal to the Supreme Court. Bank Millennium
believes that the prognosis regarding the litigation chances of winning the case before the Supreme Court is positive.
Bank Millennium (along with other banks) is also a party to the dispute with OPCC, in which the OPCC Chairman
recognized the practice of participating banks, including Bank Millennium, in an agreement aimed at jointly setting
interchange fee rates charged on transactions made with Visa and Mastercard cards as restrictive of competition, and
by decision of 29 December 2006 imposed a fine on Bank Millennium in the amount of PLN 12.2 million (Euros 2.61
million). Bank Millennium, along with other banks, appealed the decision.
In connection with the judgment of the Supreme Court and the judgment of the Court of Appeal in Warsaw of 23
November 2020, the case is currently pending before the court of first instance - the Court of Competition and
Consumer Protection. Bank Millennium has created a provision in the amount equal to the imposed penalty.

2022 REPORT & ACCOUNTS |

| 429
4. On 22 September 2020, Bank Millennium received decision of the Chairman of the Office for Protection of
Competition and Consumers (OPCC Chairman) recognising clauses stipulating principles of currency exchange applied in
the so-called anti-spread annex as abusive and prohibited the use thereof.
Penalty was imposed upon Bank Millennium in the amount of PLN 10.5 million (Euros 2.24 million). Penalty amount
takes account of two mitigating circumstances: cooperation with the Office for Protection of Competition and
Consumers and discontinuation of the use of provisions in question.
Bank Millennium was also requested, after the decision becomes final and binding, to inform consumers, by registered
mail, to the effect that the said clauses were deemed to be abusive and therefore not binding upon them (without need
to obtain court’s decision confirming this circumstance) and publish the decision of the case on Bank Millennium’s
website.
In the decision justification delivered in writing the OPCC Chairman stated that FX rates determined by Bank Millennium
were determined at Bank Millennium’s discretion (on the basis of a concept, not specified in any regulations, of average
inter-bank market rate). Moreover, client had no precise knowledge on where to look for said rates since provision
referred to Reuters, without precisely defining the relevant site.
Provisions relating to FX rates in Bank Millennium’s tables were challenged since Bank Millennium failed to define when
and how many times a day these tables were prepared and published.
In justification of the decision, the OPCC Chairman also indicated that in the course of the proceeding, Bank Millennium
presented various proposed solutions, which the OPCC Chairman deemed to be insufficient.
The decision is not final and binding. Bank Millennium appealed against the said decision within statutory term.
On 31 March 2022, the first instance court revoked the entire decision of the Chairman of the OPCC. On 23 May 2022,
the Chairman of the OPCC filed an appeal. On 26 October 2022, the Court of Appeal changed the judgment of the court
of first instance and shared the position of the Chairman of the OPCC as to the abusiveness of the provisions regarding
the determination of exchange rates in the annexes concluded with foreign currency borrowers. On 21 November 2022,
the Court of Appeal, at the request of Bank Millennium, suspended the execution of the judgment until the end of the
cassation proceedings. Bank Millennium filled a cassation appeal to the Supreme Court.
5. As at 31 December 2022, the most important proceedings, in the group of the court cases where the Group’s
companies are defendant, are following:
- Bank Millennium is a defendant in three court proceedings in which the subject of the dispute is the amount of the
interchange fee. In two of the abovementioned cases, Bank Millennium was sued jointly and severally with another
bank, and in one with another bank and card organizations. The total value of claims submitted in these cases is PLN
729.6 million (Euros 155.84 million). The proceedings with the highest value of the submitted claim are brought by PKN
Orlen SA, in which the plaintiff demands payment of PLN 635.7 million (Euros 135.79 million). The plaintiff in this
proceeding alleges that the banks acted under an agreement restricting competition on the acquiring services market
by jointly setting the level of the national interchange fee in the years 2006-2014. In the other two cases, the charges
are similar to those raised in the case brought by PKN Orlen SA, while the period of the alleged agreement is indicated
for the years 2008-2014. According to current estimates of the risk of losing a dispute in these matters, Bank Millennium
did not create a provision. In addition, we point out that Bank Millennium participates as a side intervener in four other
proceedings regarding the interchange fee. Other banks are the defendant. Plaintiffs in these cases also accuse banks
of acting as part of an agreement restricting competition on the acquiring services market by jointly setting the level of
the national interchange fee in the years 2008-2014.

| 2022 REPORT & ACCOUNTS

430 |
- A lawsuit brought up by Europejska Fundacja Współpracy Polsko-Belgijskiej/European Foundation for Polish-Belgian
Cooperation (EFWP-B) against Bank Millennium S.A., worth of the dispute PLN 521.9 million (Euros 111.48 million) with
statutory interest from 5 April 2016 until the day of payment. The plaintiff filed the suit dated 23 October 2015 to the
Regional Court in Warsaw; the suit was served to Bank Millennium on 4 April 2016. According to the plaintiff, the basis
for the claim is damage to their assets, due to the actions taken by Bank Millennium and consisting in the wrong
interpretation of the Agreement for working capital loan concluded between Bank Millennium and PCZ S.A., which
resulted in placing the loan on demand. In the case brought by EFWP-B, the plaintiff moved for securing the claim in
the amount of PLN 250.0 million (Euros 53.40 million). The petition was dismissed on 5 September 2016 with legal
validity by the Appellate Court. Bank Millennium is requesting complete dismissal of the suit, stating disagreement with
the charges raised in the claim. Supporting the position of Bank Millennium, Bank Millennium’s attorney submitted a
binding copy of final verdict of Appeal Court in Wrocław favourable to Bank Millennium, issued in the same legal state
in the action brought by PCZ SA against Bank Millennium. At present, the Court of first instance is conducting evidence
proceedings.
As at 31 December 2022, the total value of the subjects of the other litigations in which the Group’s companies
appeared as defendant, stood at PLN 3,876.4 million (Euros 828.01 million) (excluding the class actions described below
and in note 57). In this group the most important category are cases related with FX loans mortgage portfolio and cases
related to forward transactions (option cases).
6. On 3 December 2015 a class action was served on Bank Millennium. A group of Bank Millennium's debtors (454
borrowers party to 275 loan agreements) is represented by the Municipal Consumer Ombudsman in Olsztyn. The
plaintiffs demanded payment of the amount of PLN 3.5 million (Euros 0.75 million), claiming that the clauses of the
agreements, pertaining to the low down payment insurance, are unfair and thus not binding. Plaintiff extended the
group in the court letter filed on 4 April 2018, therefore the claims increased from PLN 3.5 million (Euros 0.75 million)
to over PLN 5 million (Euros 1.07 million).
Actual status:
On 1 October 2018, the group's representative corrected the total amount of claims pursued in the proceedings and
submitted a revised list of all group members, covering the total of 697 borrowers – 432 loan agreements. The value of
the subject of the dispute, as updated by the claimant, is PLN 7,371,107.94 (Euros 1,574,484.78).
By the resolution of 1 April 2020 the court established the composition of the group as per request of the plaintiff and
decided to take witness evidence in writing and called on the parties to submit questions to the witnesses. Bank
Millennium submitted a pleading with questions to witnesses in July 2020. Currently, the court is collecting written
testimony from witnesses. The date of the hearing has not been set at the moment.
As at 31 December 2022, there were also 218 individual court cases regarding LTV (loans-to-value) insurance (cases in
which only a claim for the reimbursement of the commission or LTV insurance fee is presented).
7. On 13 August 2020, Bank Millennium received lawsuit from the Financial Ombudsman. The Financial Ombudsman, in
the lawsuit, demands that Bank Millennium and the Insurer (TU Europa) be ordered to discontinue performing unfair
market practices involving, as follows:
- presenting the offered loan repayment insurance as protecting interests of the insured in case when insurance
structure indicates that it protects Bank Millennium’s interests;
- use of clauses linking the value of insurance benefit with the amount of borrower’s debt;
- use of clauses determining the amount of insurance premium without prior risk assessment (underwriting);
- use of clauses excluding insurer’s liability for insurance accidents resulting from earlier causes.
Furthermore, the Ombudsman requires Bank Millennium to be ordered to publish, on its website, information on use of
unfair market practices.

2022 REPORT & ACCOUNTS |

| 431
The lawsuit does not include any demand for payment, by Bank Millennium, of any specified amounts. Nonetheless, if
the practice is deemed to be abusive it may constitute grounds for future claims to be filed by individual clients.
The case is being examined by the court of first instance.
8. On 1 October 2015, a set of entities connected to a group with debts in default to BCP amounting to Euros 170
million, resulting from a loan agreement signed in 2009 - debts already fully provisioned in the Bank's accounts -, filed
against BCP, after receiving the Bank's notice for mandatory payment, a lawsuit requesting that:
a) the court declares that two of the defendants are mere fiduciary owners of 340,265,616 BCP shares, since they acted
pursuant to a request made by the Bank for the making of the respective purchases, and also that the court orders the
cancellation of the registration of those shares in the name of those companies;
b) the court declares the nullity of the financing agreement established between the plaintiffs and the Bank, due to
relative simulation;
c) the court sentences the Bank, in accordance with the legal regime of the mandate without representation, to
become liable for the amounts due to the institution, abstaining from requesting those amounts to the plaintiffs and to
refund them the cost they incurred while complying with that mandate, namely, Euros 90,483,816.83 regarding Banco
Espírito Santo, S.A. (BES) and Euros 52,021,558.11 regarding Caixa Geral de Depósitos, S.A. (CGD), plus default
interests;
d) the amount of the lawsuit determined by the plaintiffs is Euros 317,200,644.90;
e) the Bank opposed and presented a counter claim, wherein it requests the conviction, namely, of a plaintiff company
in the amount of Euros 185,169,149.23 for the loans granted, plus default interests and stamp tax.
The court issued a curative act and already ascertained the factual basis that are proven and that must be proven.
The expertise was carried out and the expert report was submitted. There is a deadline for completing and concluding
the expert report, in its final version, since the Bank presented a complaint about various aspects of the expert's
report, in its first version.
9. Resolution Fund
Resolution measure of Banco Espírito Santo, S.A.
On 3 August 2014, with the purpose of safeguarding the stability of the financial system, Banco de Portugal applied a
resolution measure to Banco Espírito Santo, S.A. (BES) in accordance with the Article 145-C (1.b) of the Decree-law no.
298/92, of 31 December 1992, as amended (the “Banking Law”), which entailed, inter alia, the partial transfer of
assets, liabilities, off-balance sheet items and assets under management into a transition bank, Novo Banco, S.A. (Novo
Banco), incorporated on that date by a decision issued by Banco de Portugal. Within the scope of this process, the
Resolution Fund made a capital contribution to Novo Banco amounting to Euros 4,900 million, becoming, on that date,
the sole shareholder. Further, in accordance with information published on the Resolution Fund’s website, the
Resolution Fund borrowed Euros 4,600 million, of which Euros 3,900 million were granted by the Portuguese State and
Euros 700 million by a group of credit institutions, including the Bank.
As announced on 29 December 2015, Banco de Portugal transferred to the Resolution Fund the liabilities emerging from
the “eventual negative effects of future decisions regarding the resolution process that may result in liabilities or
contingencies”.
On 7 July 2016, the Resolution Fund declared that it would analyse and evaluate the diligences to be taken, following
the publication of the report on the result of the independent evaluation, made to estimate the level of credit recovery
for each category of creditors under a hypothetical scenario of a normal insolvency process of BES on 3 August 2014.
In accordance with the applicable law, when the BES liquidation process is over, if it is verified that the creditors,
whose credits were not transferred to Novo Banco, would take on a higher loss than the one they would hypothetically
take if BES had gone into liquidation right before the application of the resolution measure, such creditors shall be
entitled to receive the difference from the Resolution Fund.

| 2022 REPORT & ACCOUNTS

432 |
On 31 May 2019, the Liquidation Committee of BES presented a list of all the acknowledged and a list of the non-
acknowledged creditors before the court and the subsequent terms of the proceedings. These lists detail that the total
acknowledged credits, including capital, remunerative and default interest amounts to Euros 5,056,814,588, of which
Euros 2,221,549,499 are common credits and Euros 2,835,265,089 are subordinated claims, and no guaranteed or
privileged claims exist. Both the total number of acknowledged creditors and the total value of the acknowledged
credits and their ranking will only be ultimately determined upon the definitive judicial judgment of the verification
and ranking of credits to be given in the liquidation proceedings.
Following the resolution measure of BES, a significant number of lawsuits against the Resolution Fund was filed and is
underway. According to note 20 of the Resolution Fund’s annual report of 2021, “Legal actions related to the
application of resolution measures have no legal precedents, which makes it impossible to use case law in its
evaluation, as well as to obtain a reliable estimate of the associated contingent financial impact. (…) The Resolution
Fund, supported by legal advice of the attorneys for these actions, and in light of the legal and procedural
information available so far, considers that there is no evidence to cast doubt on their belief that the probability of
success is higher than the probability of failure”.
According to note 22 of the Resolution Fund’s annual report of 2021, "In addition to the Portuguese courts, it is
important to take into account the litigation of Novo Banco, S.A., in other jurisdictions, being noteworthy, for its
materiality and respective procedural stage, the litigation in the Spanish jurisdiction. (...) Regarding litigation in the
Spanish jurisdiction, during the years 2018 to 2021, ten (decisions) have become final and unappealable condemning
Novo Banco, Spanish branch, as well as three sentences in relation to which due compensation has been requested
from the Resolution Fund”.
On 31 March 2017, Banco de Portugal communicated the sale of Novo Banco, where it states the following: "Banco de
Portugal today selected Lone Star to complete the sale of Novo Banco. The Resolution Fund has consequently signed
the contractual documents of the transaction. Under the terms of the agreement, Lone Star will inject a total of Euros
1,000 million in Novo Banco, of which Euros 750 million at completion and Euros 250 million within a period of up to 3
years. Through the capital injection, Lone Star will hold 75% of the share capital of Novo Banco and the Resolution
Fund will maintain 25% of the share capital”.
The terms agreed also included a Contingent Capital Agreement (CCA), under which the Resolution Fund, as a
shareholder, undertakes to make capital injections if certain cumulative conditions are met related to the performance
of a specific portfolio of assets and to the capital ratios of Novo Banco going forward.
If these conditions are met, the Resolution Fund may be called upon to make a payment to Novo Banco for the lesser of
the accumulated losses in the covered assets and the amount necessary to restore the capital ratios at the agreed
levels. Any capital injections to be carried out pursuant to this contingent mechanism are limited to an absolute cap.
The terms agreed also provide for mechanisms to safeguard the interests of the Resolution Fund, to align incentives as
well as monitoring mechanisms, notwithstanding the limitations arising from State Aid rules.
On 18 October 2017, following the resolution of the Council of Ministers no. 151-A/2017 of 2 October 2017, Banco de
Portugal communicated the conclusion of the sale of Novo Banco to Lone Star, with an injection by the new shareholder
of Euros 750 million, followed by a further capital increase of Euros 250 million by the end of 2017. Upon completion of
the transaction, the status of Novo Banco as a bridge institution ceased, fully complying with the purposes of the
resolution of BES.

2022 REPORT & ACCOUNTS |

| 433
On 26 February 2018, the European Commission published the non-confidential version of its decision regarding the
approval of State aid underlying Novo Banco’s sale process. This statement identifies the three support measures by the
Resolution Fund and the Portuguese State that are part of the sale agreement associated with a total gross book value
of around Euros [10-20] billion(1) that revealed significant uncertainties regarding adequacy in provisioning(2):
(i)Contingent Capital Agreement (CCA) which allows Lone Star to reclaim, from the Resolution Fund, funding costs,
realised losses and provisions related to an ex-ante agreed portfolio of existing loan stock, up to a maximum of
Euros 3.89 billion, subject to a capital ratio trigger (CET1 below 8%-13%) as well as to some additional
conditions(1)(2)(3);
(ii)underwriting by the Resolution Fund of a Tier 2 instrument to be issued by Novo Banco up to the amount necessary
(but no more than Euros 400 million). The amount that can be reclaimed by the Resolution Fund under the CCA is
subject to the cap of Euros 3.89 billion(2);
(iii) in case the Supervisory Review and Evaluation Process (“SREP”) total capital ratio of Novo Banco falls below the
SREP total capital requirement, the Portuguese State will provide additional capital in certain conditions and
through different instruments(2). According to the audit report on the management of Novo Banco conducted by the
Court of Auditors and released on 12 July 2022, "the risk of triggering the additional capital mechanism (capital
backstop), up to Euros 1.6 billion, provided for in the commitments made by the Portuguese State to ensure the
viability of NB, exists”.
According to Novo Banco’s earnings presentation of December 2022, Novo Banco still has Euros 485 million under the
MCC in addition to the Euros 209 million included in the capital call for 2021. The mechanism is in place until December
2025, date that can be extended, under certain conditions, by one additional year.
According to a statement issued by the Resolution Fund on 13 February 2023, "the Ministry of Finance has disclosed that
the European Commission intends to consider the restructuring process of Novo Banco as completed. The information
disclosed today confirms the successful restructuring of Novo Banco, resulting from the combined execution of the
restructuring plan agreed in 2017, under the sale transaction conducted by Banco de Portugal, and the sale
agreements, namely the CCA, under which the Resolution Fund transferred to Novo Banco 485 million euros, less than
the maximum amount set in the contract (3,890 million euros). The completion of the restructuring of Novo Banco, in
which the Resolution Fund maintains a 19.31% stake, is also another indicator that Novo Banco should not need to
request any further payment to the Resolution Fund under the CCA, without prejudice to the ongoing litigation or that
still may occur regarding the amounts already requested by Novo Banco in relation to past years and that the Resolution
Fund considers that are not due. In the statement issued by Banco de Portugal on the same day, it is also disclosed that
"The conclusion of the Novo Banco restructuring process also results in the end of the backstop mechanism, which
provided for the possibility, which was always considered remote, of the Portuguese State providing extraordinary
support to Novo Banco in extreme scenarios. This mechanism protected Novo Banco and the national financial system
from more adverse scenarios, which did not materialize. With the end of the backstop, the financial risk for the
Portuguese State is eliminated".
According to the 2018 Resolution Fund’s annual report, the Resolution Fund and Novo Banco have agreed that a
Verification Agent - an independent entity which is essentially responsible for clarifying any differences that may exist
between Novo Banco and the Resolution Fund regarding the set of calculations inherent to the CCA or regarding the
practical application of the principles stipulated in the contract - is in charge of confirming that the perimeter of the
mechanism is correct and that the balance sheet values of Novo Banco are being correctly reflected in the mechanism,
as well as verifying the underlying set of calculations, namely by confirming the correct calculation of losses and the
reference value of the assets. According to the 2021 Resolution Fund’s annual report, the Resolution Fund follows the
work carried out by the Verification Agent, while specific analyses are being requested.
(1) Exact value not disclosed by the European Commission for confidentiality reasons
(2) As referred to in the respective European Commission Decision
(3) According to 2018 Novo Banco’s earnings institutional presentation, the “minimum capital condition” is (i) CET1 or Tier 1 < CET1 or
Tier 1 SREP requirement plus a buffer for the first three years (2017-2019); (ii) CET1 < 12%

| 2022 REPORT & ACCOUNTS

434 |
In its 2021 annual report, the Resolution Fund states that “eventual new requests regarding future periods, with
significant uncertainty regarding the relevant parameters for the calculation of eventual responsibilities, under the
terms of the CCA, are recorded as contingent liabilities”.
The Resolution Fund disclosed on 17 June 2019 a set of clarifications related to the payment due in 2019 under the CCA
with Novo Banco, namely:
- For payments from the Resolution Fund to be made (limited to a maximum of Euros 3,890 million over the lifetime of
the mechanism), losses on the assets under the contingent mechanism should be incurred and the capital ratios of Novo
Banco should stand below the agreed reference thresholds;
- The payment to be made by the Resolution Fund corresponds to the lower of the accumulated losses on the assets
covered and the amount necessary to restore the capital ratios above the minimum reference threshold;
- The reference capital ratios are, in 2017, 2018 and 2019, linked to the regulatory requirements applicable to Novo
Banco (CET1 ratio of 11.25% and Tier 1 ratio of 12.75%), but, as from 2020, the reference ratio will correspond to a
CET1 ratio of 12%;
- The initial reference value of the portfolio comprising the CCA was, as of 30 June 2016, Euros 7,838 million (book
value of the associated assets, net of impairments);
- The value of the portfolio, as at 31 December 2021, amounted to Euros 1.8 billion (book value, net of impairments),
according to Novo Banco’s First Half 2022 report.
According to a notice issued by the Resolution Fund on 4 June 2020, the "Resolution Fund and Novo Banco have
initiated an arbitration procedure to clarify the treatment that should be given, under the CCA, of the effects of Novo
Banco’s decision to waive the transitional regime it currently benefits from and which aims to reduce the impact of
the introduction of IFRS 9 on credit institutions' own funds. This issue falls within the scope of the implementation of
the CCA, which sets the maximum amount of payments to be made by the Resolution Fund at Euro 3,890 million. Thus,
even if the arbitration procedure were to have an unfavourable outcome for the Resolution Fund's claims, its effects
would fall under the maximum limit of Euros 3,890 million in accordance with the CCA. The above arbitral proceedings
therefore do not represent an additional risk compared to the ceiling of Euros 3,890 million".
According to Resolution Fund’s annual report of 2021 (Box 1), "the award of the Arbitration Court, constituted under
the aegis of the International Chamber of Commerce, was known at the end of October 2021, and was favorable to the
Resolution Fund. The Arbitration Court considered that (...) the financial impact on Novo Banco's own funds could not
be covered by the CCM. The value of the dispute at the date of the award amounted to 169 million euros, an amount
that the Resolution Fund would have had to pay to Novo Banco if the Arbitration Court's award had not been
favorable".
Additionally, regarding the intervention of the Resolution Fund concerning the transitional regime of the
implementation of the dynamic component of IFRS 9, Novo Banco estimates a positive impact on its own funds in the
amount of Euros 171 million (which implies a reduction in the capital requirements that Novo Banco intended to pass on
to the CCM in the amount of Euros 161.6 million). Accordingly, the Resolution Fund initiated a second arbitration
proceeding, also under the aegis of the International Chamber of Commerce, with a view to settling the difference
between the parties. This process is in progress, and it is estimated that an award will be rendered during 2023.
According to a statement by the Resolution Fund on 3 September 2020, following the payment made in May 2019 by the
Resolution Fund to Novo Banco in compliance with the CCA, a special audit determined by the Government was carried
out. Information was presented by the independent entity that carried out the special audit, showing that Novo Banco
has been operating with a strong influence of the vast legacy of non-productive assets, originated in BES, which
resulted in impairment charges and provisions, but have also contributed to rendering Novo Banco’s internal procedures
more robust. Regarding the exercise of the powers of the Resolution Fund under the CCA, the audit results reflect the
adequacy of the principles and the adopted criteria.

2022 REPORT & ACCOUNTS |

| 435
According to Resolution Fund’s annual report of 2021, the procedure relating to the payment to Novo Banco regarding
2020 accounts has been concluded, concluding that a payment of Euros 112 million was due to Novo Banco from the
Resolution Fund which had remained pending further verification. Therefore, that amount was paid to Novo Banco, in
December 2021, after the conclusion of the supplementary analysis promoted by the Resolution Fund. This amount,
according to a statement issued by the Resolution Fund on 23 December 2021, was already provisioned, included in the
total amount of the provision (Euros 429,012,629).
According to Resolution Fund’s annual report of 2021, Novo Banco submitted to the International Chamber of
Commerce a request for arbitration to have recognized the right to receive an aggregate amount of Euros 165,441.9
thousand (divestment of Novo Banco's activity in Spain in the amount of Euros 147,441.9 thousand and valuation
differences regarding a set of assets held by Novo Banco in the amount of Euros 18,000 thousand) which the Resolution
Fund considered, and considers, not to merit the coverage of the CCM.
According to Novo Banco’s First Half 2022 report (note 30), Novo Banco adhered to the Special Regime applicable to
Deferred Tax Assets under Law No. 61/2014, of 26 August, according to which, the deferred tax assets recorded until 31
December 2015 can be converted into tax credits when the taxable entity reports an annual net loss, in accordance to
the proportion of the amount of the said net loss to total equity at the individual company level, A special reserve was
established with an amount identical to the tax credit approved, increased by 10%. The conversion rights are securities
that entitle the State to require Novo Banco to increase its share capital by incorporating the amount of the special
reserve and consequently issuing and delivering free of charge ordinary shares. The shareholders have the right to
acquire the conversion rights attributed to the Portuguese State.
According to the Resolution Fund’s 2021 annual report, under the terms of the sale of Novo Banco, the 75% of the share
capital of Novo Banco held by Nani Holdings is not affected by the dilution associated with the Special Regime
applicable to deferred tax assets (REIAD).
According to Resolution Fund’s annual report of 2021, on 17 December 2021, Novo Banco, carried out a capital increase
in the amount of Euros 154,907.3 thousand, through the conversion of the rights that had been attributed to the State
due to the conversion of the deferred tax assets of Novo Banco, into tax credits, with reference to the 2015 tax period,
under the REIAD. As of that date, the State became a shareholder of Novo Banco, having been attributed a participation
corresponding to 1.56% of the share capital. As a result, the participation of the Resolution Fund was diluted from 25%
to 23.44%.
According to Novo Banco’s announcement of 4 November 2022, the share capital increase arising from the conversion of
conversion rights relating to 2016 and 2017 fiscal years issued under the REAID increased the Portuguese State
shareholding to 5.69% and Lone Star kept the 75% share capital of Novo Banco. Only the participation of the Resolution
Fund will be diluted, concomitantly.
Also, according to the Resolution Fund’s 2021 annual report, it is estimated that the aggregate effect of the application
of the REAID will result in the reduction of the participation of the Resolution Fund to 9.05%.
On 3 May 2021, following the request of the Portuguese parliament in October 2020 to review the operations and
management of Novo Banco that led to the need to transfer funds from the Resolution Fund to Novo Banco, the
Resolution Fund announced that the audit report conducted by Tribunal de Contas (“Court of Auditors”) was released.
The Court of Auditors concluded that the public financing of Novo Banco through the CCA contributed to the stability of
the financial system, particularly as it avoided the bank’s liquidation and reduced systemic risk. According to the
Resolution Fund, the audit does not identify any impediment to the fulfilment of commitments and contracts arising
from BES’s resolution process, initiated in August 2014.
Resolution measure of Banif – Banco Internacional do Funchal, S.A.
On 19 December 2015, the Board of Directors of Banco de Portugal announced that Banif “was failing or likely to fail”
and started an urgent resolution process of the institution through the partial or total sale of its activity, which was
completed on 20 December 2015 through the sale to Banco Santander Totta S.A. (BST) of the rights and obligations of
Banif, formed by the assets, liabilities, off-balance sheet items and assets under management.

| 2022 REPORT & ACCOUNTS

436 |
The largest portion of the assets that were not sold, were transferred to an asset management vehicle denominated
Oitante, S.A. (Oitante) specifically created for that purpose, having the Resolution Fund as the sole shareholder. For
that matter, Oitante issued bonds representing debt in the amount of Euros 746 million. The Resolution Fund provided a
guarantee and the Portuguese State a counter-guarantee. The operation also involved State aid, of which Euros 489
million were provided by the Resolution Fund, which was funded by a loan granted by the State.
According to Oitante's press release on 12 January 2022, "during 2021, it repaid Euros 160.5 million related to its bond
loan of Euros 746 million, contracted when it was created on 20 December 2015 due to the resolution of Banif". On 4
July 2022, Oitante - 100% owned by the Resolution Fund - completed the process of repayment of the bonds issued in
connection with the resolution of BANIF. Oitante's debt, which initially amounted to Euros 746 million, was thus fully
repaid. With the early repayment of the debt, the Resolution Fund's responsibility as guarantor also ceases, as well as
the Portuguese State's responsibility as provider of a counter-guarantee.
On 16 January 2023, the Liquidation Committee of Banif announced a list of all the acknowledged and a list of the non-
acknowledged creditors. According to the Resolution Fund’s 2021 annual report, the Resolution Fund holds a claim on
Banif of Euros 489 million, which has a higher claim ranking provided for in article 166-A of the RGICSF. Under the
judicial liquidation process of Banif, which was initiated following the resolution, the independent evaluator estimates
that the level of recovery of the financial support made available by the Resolution Fund, as having a higher ranking at
the end of the liquidation, should be 7.6%.
On 12 January 2021, Banco de Portugal was informed that the Administrative and Fiscal Court of Funchal dismissed a
lawsuit involving several disputes associated to Banif’s resolution measures applied by Banco de Portugal. In its
decision, the Court determined the legality and maintenance of Banco de Portugal’s measures.
Liabilities and financing of the Resolution Fund
Pursuant to the resolution measures applied to BES and Banif, the Resolution Fund incurred on loans and assumed other
responsibilities and contingent liabilities resulting from:
- The State loans, on 31 December 2021, included the amounts made available (i) in 2014 for the financing of the
resolution measure applied to BES (Euros 3,900 million); (ii) to finance the absorption of Banif's losses (Euros 353
million); (iii) under the framework agreement concluded with the State in October 2017 for the financing of the
measures under the CCA (Euros 430 million plus Euros 850 million of additional funding requested in 2019 and Euros 850
million made available in 2020);
- Other funding granted:
•in 2014 by the institutions participating in the Resolution Fund in the amount of Euros 700 million, in which the
Bank participates, within the scope of BES resolution measure;
•in 2021 by seven domestic credit institutions, including BCP, to finance payments due under the CCA up to a
maximum of EUR 429 million;
- Underwriting by the Resolution Fund of a Tier 2 instrument to be issued by Novo Banco up to the amount of Euros 400
million. This underwriting did not take place as the instruments were placed with third party investors as disclosed by
Novo Banco on 29 July 2018;
- Effects of the application of the principle that no creditor of the credit institution under resolution may assume a loss
greater than the one it would take if that institution did not go into liquidation;
- Negative effects resulting from the resolution process that result in additional liabilities or contingencies for Novo
Banco, which must be neutralized by the Resolution Fund;

2022 REPORT & ACCOUNTS |

| 437
- Legal proceedings filed against the Resolution Fund;
- Guarantee granted to secure the bonds issued by Oitante, totally reimbursed, as described above.
- CCA allows Lone Star to claim, from the Resolution Fund, funding costs, realised losses and provisions related to the
aforementioned ex-ante portfolio of existing loan stock agreed upon the sale process to Lone Star up to Euros 3.89
billion under the aforementioned conditions, among which a reduction of Novo Banco’s CET1 below 8%-13%;
- In case the Supervisory Review and Evaluation Process (SREP) total capital ratio of Novo Banco falls below the SREP
total capital requirement, the State will provide additional capital in certain conditions and through different
instruments as referred to in the respective European Commission Decision.
According to Resolution Fund’s annual report of 2021, contingent liabilities from the CCA are limited to a maximum
aggregate amount of Euros 3,890 million and that the aggregate amount of this contingent liability, which corresponds
to the difference between that maximum amount and the amounts already paid by the Resolution Fund, amounts to
Euros 485 million.
The expectation of the Resolution Fund is that, except for what may eventually result from the pending arbitration
disputes with Novo Banco, no further payments will occur under the CCA. On the other hand, the value of payments
already made may be compensated, under the terms of the contracts, by the eventual recovery of credits that may
occur, to which the value of the shareholding of the Resolution Fund in Novo Banco must be added.
According to note 20 of the Resolution Fund’s 2021 annual report, the Resolution Fund considers that, to date, there
are no elements that allow a reliable estimate of the potential financial effect of these potential liabilities.
By a public statement on 28 September 2016, the Resolution Fund and the Ministry of Finance communicated the
agreement based on a review of the terms of the Euros 3,900 million loan originally granted by the State to the
Resolution Fund in August 2014 to finance the resolution measure applied to BES. According to the Resolution Fund, the
extension of the maturity of the loan was intended to ensure the ability of the Resolution Fund to meet its obligations
through its regular revenues, regardless of the contingencies to which the Resolution Fund is exposed. On the same day,
the Office of the Minister of Finance also announced that increases in the liabilities arising from the materialization of
future contingencies will determine the maturity adjustment of State and bank loans to the Resolution Fund, required
from to maintain the contributory effort required from the banking sector at prevailing levels at that time.
According to the statement of the Resolution Fund of 21 March 2017:
- “The conditions of the loans obtained from the Fund to finance the resolution measures applied to Banco Espírito
Santo, S.A. and to Banif – Banco Internacional do Funchal, S.A. were changed. These loans amount to Euros 4,953
million, of which Euros 4,253 million were granted by the Portuguese State and Euros 700 million were granted by a
group of banks";
- “Those loans are now due in December 2046, without prejudice to the possibility of early repayment based on the
use of the Resolution Fund's revenues. The revision of the loan’s terms aimed to ensure the sustainability and financial
balance of the Resolution Fund. The terms allow the Resolution Fund to fully meet its liabilities based on regular
revenues and without the need for special contributions or any other type of extraordinary contributions".
According to the audit report on the management of Novo Banco conducted by the Court of Auditors and released on 12
July 2022, "the repayment of the Euros 2,130 million loans granted by the Portuguese State to the Resolution Fund will
not end in 2046, as expected, rather in 2056 (without payments under the CCA after 2021) or in 2059 (with the use of
the CCA cap). (...) In other, more pessimistic scenarios, these loans will still be being repaid in 2062”.
According to a statement issued by the Resolution Fund on 31 December 2021, the Euros 700 million loan to the
Resolution Fund was provided by seven credit institutions (Caixa Geral de Depósitos, Banco Comercial Português, Banco
BPI, Banco Santander Totta, Caixa Económica, Montepio Geral, Banco BIC Português and Caixa Central de Crédito
Agrícola Mútuo).

| 2022 REPORT & ACCOUNTS

438 |
On 2 October 2017, by Resolution no. 151-A/2017, of the Council of Ministers of the Portuguese State, as the ultimate
guarantor of financial stability, was authorised to enter into a framework agreement with the Resolution Fund, to make
available the necessary financial resources to the Resolution Fund, if and when the State deemed necessary, to satisfy
any contractual obligations that may arise from the sale of the 75% stake in Novo Banco. The above-mentioned
resolution further set out that the framework agreement should be subject to a time period that is consistent with the
undertakings of the Resolution Fund and should preserve the Resolution Fund’s capacity to satisfy said obligations in
due time.
On 31 December 2021, the Resolution Fund's own resources had a negative equity of Euros 7,207.6 million, as opposed
to Euros 7,314.7 million at the end of 2020, according to the latest 2021 annual report of the Resolution Fund.
To repay the loans obtained and to meet other liabilities that it may take on, the Resolution Fund receives proceeds
from the initial and regular contributions from the participating institutions (including the Bank) and from the
contribution over the banking sector (created under Law no. 55-A/2010). It is also provided for the possibility of the
member of the Government responsible for the area of Finance to determine, by ordinance that the participating
institutions make special contributions, in the situations provided for in the applicable legislation, particularly if the
Resolution Fund does not have resources to satisfy its obligations.
Pursuant to Decree-Law no. 24/2013 of 19 February, which establishes the method for determining the initial, periodic
and special contributions to the Resolution Fund, provided for in the Banking Law, the Bank has been paying, since
2013, its mandatory contributions set out in the aforementioned decree-law.
On 3 November 2015, the Banco de Portugal issued Circular Letter no. 085/2015/DES, under which it is clarified that
the periodic contribution to the Resolution Fund should be recognised as an expense at the time of the occurrence of
the event which creates the obligation to pay the contribution, i.e. on the last day of April of each year, as stipulated
in Article 9 of the referred Decree-Law no. 24/2013, of 19 February, thus the Bank is recognising as an expense the
contribution to the Resolution Fund in the year in which it becomes due.
Decree-Law no. 24/2013 of 19 February further sets out that Banco de Portugal has the authority to determine, by way
of instruction (“instrução”), the applicable yearly rate based on objective incidence of periodic contributions. The
instruction of Banco de Portugal no. 19/2022, published on 15 December 2022, set the base rate for 2023 for the
determination of periodic contributions to the Resolution Fund at 0.029% (0.057% in 2022).
The Resolution Fund issued, on 15 November 2015, a public statement declaring: "...it is further clarified that it is not
expected that the Resolution Fund will propose the setting up of a special contribution to finance the resolution
measure applied to BES. Therefore, the potential collection of a special contribution appears to be unlikely".
In 2015, following the establishment of the Single Resolution Fund (SRF), the Group made an initial contribution in the
amount of Euros 31,364 thousand. In accordance with the Intergovernmental Agreement on the Transfer and
Mutualisation of Contributions to the SRF, this amount was not transferred to the SRF but was used instead to partially
cover for the disbursements made by the RF in respect of resolution measures prior to the date of application of this
Agreement. This amount will have to be reinstated over a period of 8 years (started in 2016) through the periodic
contributions to the SRF. The Single Resolution Fund does not cover undergoing situations with the National Resolution
Fund as at 31 December 2015. The total amount of the contribution attributable to the Group in the financial year of
2022 was Euros 30,400 thousand, of which the Group delivered Euros 25,847 thousand and the remaining was
constituted as irrevocable payment commitment.
During the financial year of 2022, the Group made regular contributions to the Portuguese Resolution Fund in the
amount of Euros 18,668 thousand. The amount related to the contribution on the banking sector in Portugal, registered
in the financial year of 2022, was Euros 43,484 thousand. These contributions were recognized as a cost in the financial
year of 2022, in accordance with IFRIC no. 21 – Levies.

2022 REPORT & ACCOUNTS |

| 439
It is not possible, on this date, to assess the effects on the Resolution Fund due to: (i) the sale of the shareholding in
Novo Banco in accordance with the communication of Banco de Portugal dated 18 October 2017 and the information
provided by the European Commission on this subject under the terms described above, including the effects of the
application of the Contingent Capital Agreement and the Special Regime applicable to Deferred Tax Assets; (ii) the
application of the principle that no creditor of the credit institution under resolution may take on a loss greater than
the one it would take if that institution did not go into liquidation; (iii) additional liabilities or contingencies for Novo
Banco which need to be neutralized by the Resolution Fund; and, (iv) legal proceedings against the Resolution Fund.
According to Article 5 (e) of the Regulation of the Resolution Fund, approved by the Ministerial Order no. 420/2012, of
21 December, the Resolution Fund may submit to the member of the Government responsible for finance a proposal
with respect to the determination of amounts, time limits, payment methods, and any other terms related to the
special contributions to be made by the institutions participating in the Resolution Fund. According to public
communications from both the Resolution Fund and from the Government, there is no indication that any such special
contributions are foreseen.
According to the Resolution Fund’s 2021 annual report, under note 8, "the Resolution Fund is not obliged to present
positive equity. In case of insufficient resources, the Resolution Fund may receive special contributions, as determined
by the member of the Government responsible for finance, in accordance with article 153-I of the Banking Act,
although no such contributions are expected, in particular after a review of the financing conditions of the Resolution
Fund", as described in the 2016 Annual Report. The Resolution Fund may also, exceptionally, obtain financial support
from the State, namely through loans or guarantees, as set out in article 153-J of the same regime.
On 9 September 2020, BCP informed that it has decided not to continue with the legal proceeding before the General
Court of the European Union with a view to partially annul the European Commission’s decision regarding its approval
of the CCA of Novo Banco.
According to Resolution no. 63-A/2021 of 27 May 2021 of the Council of Ministers, a number of national financial
institutions offered to finance the Resolution Fund, under conditions considered as appropriate by it, increasing up to
Euros 475 million the direct financing of banks to the Resolution Fund and waiving a Portuguese State loan to the
Resolution Fund. The funding costs of the Resolution Fund (from the State and from banks) will continue to be
exclusively borne by periodic revenues, corresponding to the contributions paid by the banking sector. The payment
obligations arising from this loan benefit from a pari passu treatment with the payment obligations of the loans entered
into with the Portuguese State on 7 August 2014 and 31 December 2015 and with the Portuguese credit institutions on
28 August 2014.
According to the Resolution Fund’s 2021 annual report, the payment to Novo Banco was fully funded with resources
from a loan from seven domestic credit institutions, including BCP, to finance payments that are due under the
aforementioned contingent capitalization mechanism, up to a maximum amount of Euros 475 million. Of this amount,
the Resolution Fund used Euros 429 million, which corresponds to the payment made to Novo Banco in 2021. The loan
matures in 2046 and bears interest at a rate corresponding to the sovereign cost of funding for the period between the
contract date (31 May 2021) and 31 December 2026, plus a margin of 15 b.p. The interest rate will be reviewed on 31
December 2026 and, after that, every five-years.
The budgetary amendment necessary to make the payment by the Resolution Fund was authorised by Order of the
Minister of State and Finance dated 31 May 2021.
10. Banco Comercial Português, S.A., Banco ActivoBank S.A. and Banco de Investimento Imobiliário, S.A. (company
merged into Banco Comercial Português, S.A.) initiated an administrative proceeding to contest the resolution adopted
by Bank of Portugal on 31 March 2017 to sell Novo Banco (NB), and also, as a precaution, the deliberation adopted by
the Resolution Fund on the same date, as they foresee the sale of NB by resorting to a contingent capitalization
agreement under which the Resolution Fund commits to inject capital in Novo Banco up to Euros 3,9 billion, under
determined circumstances. In the proceedings, the claimants request the declaration of nullity or annulment of those
acts.

| 2022 REPORT & ACCOUNTS

440 |
The proceedings were filed based on the information contained in the Communication from Bank of Portugal dated 31
March 2017, of which the claimants were not notified. The proceedings were filed in court on 4 September 2017. Bank
of Portugal and the Resolution Fund presented their arguments and, only very recently, Nani Holdings SGPS, S.A. did
the same since, by delay of the court, this company was only very recently notified to act as a party in the proceedings.
In addition to opposing to it, the defendants invoke three objections (i) the illegitimacy of the claimants, (ii) the
argument that the act performed by Bank of Portugal cannot be challenged and (iii) the material incompetence of the
court. The opponent party invoked the issue of passive illegitimacy since Novo Banco was not notified as an opponent
party.
The claimants replied to the arguments presented by the defendants and to the arguments presented by the opponent
party. After the presentation of the arguments, Bank of Portugal attached to the proceedings what it called an
evidence process (allegedly in compliance with the law) but most of the documents delivered were truncated in such a
way that neither the court nor the claimants are able to obtain adequate knowledge thereof. That issue was already
raised in the proceedings (requesting the court to order Bank of Portugal to deliver a true evidence process) but no
decision thereon has been made yet.
Currently, the proceedings are prepared for confirmation of the decision accepting the formalities of the right of action
(with the making of a decision on the specific objections invoked). In case the judge considers that Novo Banco is an
opponent party, the judge must start by issuing a pre-confirmation in order to request the claimants to identify it.
Afterwards, that Bank will be notified to present its opposition arguments.
The case was sent to the judge on 23 September 2019 and the Bank is awaiting a decision. BCP added legal opinions to
the records (Professors Mário Aroso de Almeida and Manuel Fontaine de Campos).
11. Following the restructuring process agreed with the Directorate-General for Competition (DGComp) and the
Portuguese State, Group Banco Comercial Português implemented a process of salary adjustment for a temporary
period. Additionally, it was agreed between the Bank and the Unions that, in the years after the State intervention and
if there are distributable profits, the Board of Directors and the Executive Committee would submit for approval of the
Shareholders’ General Meeting a proposal of distribution of profits to the employees, which allows the distribution of an
accumulated total global amount at least equal to the total amount that was not received over the temporary term of
the salary adjustment, as described in the clause no. 151-E of BCP’s Collective Labour Agreement, effective between
2014 and 2017.
At the General Meeting of 4 May 2022, following the proposal submitted by the Board of Directors, the application of
profits relating to the financial year of 2021 was approved, which included an extraordinary distribution to each
employee up to Euros 5,692,000, and the concrete determination of the amount to be attributed to each employee
must be fixed by the Executive Committee to employees who, having not already been fully compensated with the
results distributed in 2019 and 2020, remain in office on the date of payment of the remuneration corresponding to
June 2022.
12. The Bank was subject to tax inspections for the years up to 2019. As a result of the inspections in question,
corrections were made by the tax authorities, arising from the different interpretation of some tax rules. The main
impact of these corrections occurred regarding IRC, including in terms of the tax loss carry forwards and, in the case of
indirect tax, in the calculation of the Value-Added Tax (VAT) deduction pro rata used for the purpose of determining
the amount of deductible VAT and at the Stamp Duty level. Most of additional liquidations/corrections made by the tax
administration were the object of contestation by administrative and/or judicial means.
The Bank recorded provisions or deferred tax liabilities at the amount considered sufficient to offset the tax or tax loss
carry forwards, as well as the contingencies related to the fiscal years not yet reviewed by the tax administration.

2022 REPORT & ACCOUNTS |

| 441
57.Provisions for legal risk related to foreign currency-indexed mortgage loans in
Bank Millennium (Poland)
1. Court claims and current provisions for legal risk
On 31 December 2022, Bank Millennium had 16,008 loan agreements and additionally 1,272 loan agreements from
former Euro Bank under individual ongoing litigations (excluding claims submitted by the bank against clients i.e. debt
collection cases) concerning the use of indexation clauses of FX mortgage loans submitted to the courts (78% loans
agreements before the court of first instance and 22% loans agreements before the court of second instance) with the
total value of claims filed against the Bank Millennium by the plaintiffs amounting to PLN 2,758.4 million (Euros 589.20
million) and CHF 201.9 million (Euros 204.53 million) [(Bank Millennium portfolio: PLN 2,536 million (Euros 541.70
million) and CHF 197.3 million (Euros 199.87 million) and former Euro Bank portfolio: PLN 222.5 million (Euros 47.53
million) and CHF 4.6 million (Euros 4.66 million)].
The claims formulated by the clients in individual proceedings primarily concern the declaration of invalidity of the
contract and payment for reimbursement of paid principal and interest instalments as undue performance, due to the
alleged abusive nature of indexation clauses, or maintenance of the loan agreement in PLN and with interest rate
indexed to CHF Libor.
In addition, Bank Millennium is a party to the group proceedings (class action) subject matter of which is to determine
Bank Millennium's liability towards the group members based on unjust enrichment (undue benefit) ground in
connection with the FX mortgage loans. A judgment in these proceedings will not directly grant a right to any
compensation amounts to the group members that have initiated this class action. The number of credit agreements
covered by these proceedings is 3,273. On 24 May 2022, the court issued a judgment on the merits, dismissing the claim
in full. Both parties requested a written justification of the judgment. On 13 December 2022, the claimant filed on
appeal against the judgment of 24 May 2022 and the Bank Millennium also filed its response to the that appeal.
The aggressive advertising campaign to encourage litigation against the financial sector affected the number of court
disputes. Until the end of 2019, 1,982 individual claims were filed against Bank Millennium (in addition, 236 against
former Euro Bank), in 2020 the number increased by 3,006 (265), in 2021 the number increased by 6,153 (422), while in
2022 the number increased by 5,750 (408).
Based on ZBP (the Polish Banking Association) data gathered from all banks having FX mortgage loans, vast majority of
disputes were finally resolved in favour of banks until 2019 year. However, after the Court of Justice of the European
Union (CJEU) judgment issued on 3 October 2019 (Case C-260/18) the proportion has adversely changed and vast
majority of court cases have been lost by banks. As far as Bank Millennium itself is concerned, from 2015 and until the
end of 2022, 1,173 cases were finally resolved (1,111 in claims submitted by clients against Bank Millennium and 62 in
claims submitted by Bank Millennium against clients i.e. debt collection cases). out of which 354 were settlements, 46
were remissions, 53 rulings were favorable for Bank Millennium and 720 were unfavorable, including both invalidation
of loan agreements as well as conversions into PLN+LIBOR. Bank Millennium files appeals against negative judgements
of the courts of first instance as well as submits cassation appeals to the Supreme Court against unfavourable for Bank
Millennium legally binding verdicts. Currently, the statistics of first and second instance court decisions are much more
unfavourable and its number is also increasing.
The outstanding gross balance of the loan agreements under individual court cases and class action against Bank
Millennium on 31 December 2022 was PLN 5,576 million (Euros 1,191.05 million) [of which the outstanding amount of
the loan agreements under the class action proceeding was PLN 897 million (Euros 191.6 million)].
If all Bank Millennium’s originated loan agreements currently under individual and class action court proceedings would
be declared invalid without proper compensation for the use of capital, the pre-tax cost could reach PLN 5,499 million
(Euros 1,174.6 million). Overall losses may be higher or lower depending on the final court decision in this regard.

| 2022 REPORT & ACCOUNTS

442 |
During 2022, Bank Millennium created a PLN 1,844 million provisions (Euros 393.88 million) and PLN 173 million (Euros
36.95 million) for former Euro Bank originated portfolio. The balance sheet value of provisions for the Bank Millennium
portfolio at the end of December 2022 was at the level of PLN 4,986 million (Euros 1,065.02 million), and PLN 409
million (Euros 87.36 million) for former Euro Bank originated portfolio.
The methodology developed by Bank Millennium for calculating provisions for legal risk involved with indexed loans is
based on the following main parameters:
(1) the number of current cases (including class actions) and potential future lawsuits that arise within a specified
(three-year) time horizon;
(2) the amount of Bank Millennium's potential loss in the event of a specific court judgment;
(3) the probability of obtaining a specific court judgment calculated on the basis of statistics of decisions of the
banking sector in Poland and legal opinions obtained;
(4) in the case of the scenario of cancellation of the loan agreement, the element taken into account, with a view to
legal assessments, is the calculation of Bank Millennium's loss, taking into account the assignment of a minimum
probability of obtaining remuneration for the use of capital made available;
(5) estimates involved with amicable settlements with clients, concluded in court or out of court:
a.negotiations are conducted on a case-by-case basis and can be stopped at any time by Bank Millennium
b.as the negotiations efforts have already been material in the past, the probability of success may be lower in
the future and at the same time, gradually most of the client base has had contact with Bank Millennium
regarding potential negotiation of the conversion of the loans to PLN, so Bank Millennium is taking a
conservative approach when calculating the potential future impact for the time being.
Legal risk from former Euro Bank portfolio is fully covered by Indemnity Agreement with Societe Generale.
Bank Millennium analyzed the sensitivity of the methodology for calculating provisions, for which a change in the
parameters would affect the value of the estimated loss to the legal risk of litigation:

Parameter | Scenario | Impact on loss due to legal risk related to the portfolio of mortgage loans in convertible currencies
Change in the number of lawsuits | Additionally, 1 p.p. of active clients file a lawsuit against Bank Millennium | PLN 35 million (Euros 7.48 million)
Change in the probability of winning a case | The probability of Bank Millennium winning a case is lower by 1 p.p | PLN 41 million (Euros 8.76 million)
Change in estimated losses for each variant of the judgment | Increase in losses for each variant of the judgment by 1 p.p | PLN 40 million (Euros 8.54 million)

Bank Millennium is open to negotiate case by case favourable conditions for early repayment or conversion of loans to
PLN. As a result of these negotiations and other natural drivers, the number of active FX mortgage loans decreased by
8,449 in 2021 and 7,943 in 2022. As of end 2022, Bank Millennium had 38,011 active FX mortgage loans. Cost incurred in
conjunctions with these negotiations totalled PLN 364.5 million (Euros 77.86 million) in 2021 and PLN 515.2 million
(Euros 110.05 million) in 2022 and is presented mainly in ‘Foreign exchange gains/(losses)’ in the income statement,
and in 2022 also in 'Results on modification'.
Finally, it should also be mentioned, that Bank Millennium, as at 31 December 2022, had to maintain additional own
funds for the coverage of additional capital requirements related to FX mortgage portfolio risks (Pillar II FX buffer) in
the amount of 1.95 p.p. (1.94 p.p. at the Group level), part of which is allocated to operational/legal risk.

2022 REPORT & ACCOUNTS |

| 443
CJEU and Supreme Court rulings relevant to risk assessment
On 3 October 2019, the Court of Justice of the European Union ('the CJEU') issued the judgment in Case C-260/18 in
connection with the preliminary questions formulated by the District Court of Warsaw in the case against Raiffeisen
Bank International AG. The judgment of the CJEU, as regards the interpretation of European Union law made therein, is
binding on domestic courts. The judgment in question interpreted Article 6 of Directive 93/13/EEC of 5 April 1993 on
unfair terms in consumer contracts establishing that the said provision must be interpreted (i) as not precluding a
national court, after finding that certain terms of a loan agreement indexed to a foreign currency and subject to an
interest rate directly linked to the interbank rate of the currency concerned are unfair, from taking the view, in
accordance with its domestic law, that that contract cannot continue in existence without those terms because the
effect of their removal would be to alter the nature of the main subject matter of the contract; (ii) first, the
consequences for the consumer of a contract being annulled in its entirety, must be assessed in the light of the existing
or foreseeable circumstances at the time when the dispute arose, and that, second, for the purposes of that
assessment, the wishes expressed by the consumer in that regard are the decisive factor; (iii) as precluding gaps in a
contract caused by the removal of the unfair terms contained in that contract from being filled solely on the basis of
national provisions of a general nature which provide that the effects expressed in a legal transaction are to be
supplemented, inter alia, by the effects arising from the principle of equity or from established customs, which are
neither supplementary provisions nor provisions applicable where the parties to the contract so agree; (iv) as
precluding unfair terms contained in a contract from being upheld where their removal would entail that contract being
annulled and the court takes the view that that annulment would give rise to unfavorable effects for the consumer, if
the latter has not consented to them being upheld.
The CJEU judgment concerns only the situation where the national court has previously found the contract term to be
abusive. It is the exclusive competence of the national courts to assess, in the course of judicial proceedings, whether a
particular contract term can be regarded as abusive in the circumstances of the case.
On 29 April 2021, the CJEU issued the judgement in the case C-19/20 in connection with the preliminary questions
formulated by the District Court in Gdańsk in the case against of ex-BPH S.A., CJEU said that the Council Directive
93/13/EEC of 5 April 1993 on unfair terms in consumer contracts must be interpreted as meaning that (i) it is for the
national court to find that a term in a contract concluded between a seller or supplier and a consumer is unfair, even if
it has been contractually amended by those parties. Such a finding leads to the restoration of the situation that the
consumer would have been in in the absence of the term found to be unfair, except where the consumer, by means of
amendment of the unfair term, has waived such restoration by free and informed consent, which it is for the national
court to ascertain. However, it does not follow from that provision that a finding that the original term is unfair would,
in principle, lead to annulment of the contract, since the amendment of that term made it possible to restore the
balance between the obligations and rights of those parties arising under the contract and to remove the defect which
vitiated it; (ii) they do not preclude the national court from removing only the unfair element of a term in a contract
concluded between a seller or supplier and a consumer where the deterrent objective pursued by that directive is
ensured by national legislative provisions governing the use of that term, provided that that element consists of a
separate contractual obligation, capable of being subject to an individual examination of its unfair nature, and those
provisions preclude the referring court from removing only the unfair element of a term in a contract concluded
between a seller or supplier and a consumer where such removal would amount to revising the content of that term by
altering its substance, which it is for that court to determine; (iii) the consequences of a judicial finding that a term if
a contract concluded between a seller or supplier and a consumer is unfair are covered by national law and the
question of continuity of the contract should be assessed by the national court of its own motion in accordance with an
objective approach on the basis of those provisions;(iv) it is for the national court, finding that a term in a contract
concluded between a seller or supplier and a consumer, to inform the consumer, in the context of the national
procedural rules after both parties have been heard, of the legal consequences entailed by annulment of the contract,
irrespective of whether the consumer is represented by a professional representative.

| 2022 REPORT & ACCOUNTS

444 |
On 18 November 2021, the Court of Justice of the European Union (CJEU) issued a judgment in case C-212/20 in
connection with questions submitted by the District Court for Warsaw Wola, in Warsaw, in the case against Raiffeisen
Bank International AG. The CJEU stated the Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer
contracts must be interpreted (i) as meaning that the content of a clause of a loan agreement concluded between a
seller or supplier and a consumer that sets the buying and selling prices of a foreign currency to which the loan is
indexed must enable a consumer who is reasonably well informed and reasonably observant and circumspect to
understand, on the basis of clear and intelligible criteria, the way in which the foreign currency exchange rate used to
calculate the amount of the repayment instalments is set, in order that that consumer is able to determine himself or
herself, at any time, the exchange rate applied by the seller or supplier; (ii) as precluding the national court, which has
found that a term of a contract concluded between a seller or supplier and a consumer is unfair, within the meaning of
Article 3(1) of that directive, from interpreting that term in order to remedy its unfairness, even if that interpretation
would correspond to the common intention of the parties to that contract.
On 10 June 2021, the Court of Justice of the European Union (CJEU) issued an order in case C-198/20 in connection
with questions submitted by the District Court for Warsaw Wola in Warsaw in the case against Santander Bank Polska
SA. The CJEU stated that the protection provided for in Council Directive 93/13/EEC is granted to all consumers, not
just those who can be considered to be 'duly informed and reasonably observant and circumspect average consumers'.
On 8 September 2022, the Court of Justice of the European Union (CJEU) issued a judgment in joined cases C-80/21,
C-81/21, C-82/21 in connection with questions submitted by the District Court for Warsaw Śródmieście in Warsaw in
cases against Deutsche Bank SA and mBank SA. The CJEU stated the Council Directive 93/13/EEC of 5 April 1993 on
unfair terms in consumer contracts must be interpreted (i) as precluding national case-law according to which the
national court may declare unfair not the entire term of a contract concluded between a consumer and a seller or
supplier, but only those parts of it which are unfair, so that the term remains partially effective after the removal of
those parts, where such removal would be tantamount to revising the content of the term by affecting its substance,
which is a matter for the national court to determine; (ii) as precluding national case-law according to which the
national court may, after finding that an unfair term contained in a contract concluded between a consumer and a
seller or supplier is void and does not result in the annulment of that contract as a whole, replace that term with a
supplementary provision of national law; (iii) as precluding national case-law according to which the national court
may, after finding that an unfair term contained in a contract concluded between a consumer and a seller or supplier is
void and that the contract as a whole is void, replace the annulled term either by interpreting the parties’ wishes in
order to avoid the annulment of the contract, or by applying to the annulled unfair term a supplementary provision of
national law, even though the consumer has been informed of the consequences of the annulment of that contract and
has accepted them; (iv) as precluding national case-law according to which the 10‑year limitation period for a
consumer’s action for the restitution of sums unduly paid to a seller or supplier in performance of an unfair term
contained in a credit agreement with a duration of 30 years begins to run on the date of each performance by the
consumer, even though the consumer was not in a position, at that date, to assess the unfairness of the contractual
term himself or herself or was not aware of the unfairness of the term, and regardless of the fact that the contract had
a repayment period, in this case 30 years, which is much longer than the statutory limitation period of 10 years.
On 7 May 2021, the Supreme Court composed of 7 judges of the Supreme Court, issued a resolution for which the
meaning of legal principle has been granted, stating that:
1. An abusive contractual clause (art. 3851 § 1 of the Polish Civil Code), by force of the law itself, is ineffective to the
benefit of the consumer who may consequently give conscious and free consent to this clause and thus restore its
effectiveness retroactively.
2. If, without the ineffective clause, the loan agreement cannot be binding, the consumer and the lender shall be
entitle for separate claims for return of cash benefits made to the other part during the term of this agreement (art.
410 § 1 in relation to art. 405 of the Polish Civil Code). The lender may demand return of the performance from the
moment the loan agreement becomes definitively ineffective.

2022 REPORT & ACCOUNTS |

| 445
On 28 April 2022, the Supreme Court issued a resolution (III CZP 40/22) in which it indicated that in disputes with
consumers, the provision of Article 358º 1 of the Polish Civil Code is a special provision to Article 353º 1 of the Civil Code,
which means that if the prerequisites for the application of both provisions exist, the court should apply the special
provision and declare the contractual provision definitively ineffective, rather than invalid. This decision of the
Supreme Court should be perceived as significantly limiting the risk of Bank Millennium's claims for return of capital
being time-barred.
In this context, taking into consideration the recent negative evolution in the court verdicts regarding FX mortgage
loans, and if such trend continues, Bank Millennium will have to regularly review and may need to continue to increase
the balance of provisions allocated to court litigations.
It can reasonably be assumed that the legal issues relating to foreign currency mortgage loans will be further examined
by the national courts within the framework of disputes considered which would possibly result in the emergence of
further interpretations, which are relevant for the assessment of the risks associated with subject matter proceedings.
This circumstance indicates the need for constant analysis of these matters. Further request for clarification and ruling
addressed to the European Court of Justice and Polish Supreme Court have already been filed and may still be filed
with potential impact on the outcome of the court cases.
2. Events that may impact foreign currency-indexed mortgage loans legal risk and related
provision
On 29 January 2021 a set of questions addressed by the First President of the Polish Supreme Court to the full Civil
Chamber of the Supreme Court was published. This may have important consequences in terms of clarifications of
relevant aspects of the court rulings and their consequences. The Civil Chamber of the Supreme Court has been
requested for answering the questions concerning key matters related to FX mortgage agreements: (i) is it possible to
replace - with a legal provisions or according commons practices - the abusive provisions of an agreement which refer
to FX exchange rate determination; moreover, (ii) in case of impossibility of determining the exchange rate of a foreign
currency in the indexed/denominated credit agreement - is it possible to keep the agreement still in force in its
remaining scope; as well as (iii) if in case of invalidity of the CHF credit there would be applicable the theory of
balance (i.e. does arise a single claim which is equal to the difference between value of claims of bank and the
customer) or the theory of two conditions (separate claims for the bank and for the client that should be dealt with
separately). The Polish Supreme Court has also been requested for answering the question on (iv) from which point in
time there shall be starting the limitation period in case of bank's claim for repayment of amounts made available as a
loan and (v) whether banks and consumers may receive remuneration for using their pecuniary means by another party.
On 11 May 2021, the Civil Chamber of the Polish Supreme Court requested opinions on Swiss franc mortgage loans from
five institutions including the National Bank of Poland (NBP), the Polish Financial Supervision Authority (UKNF), the
Commissioner for Human Rights, the Children's Rights Ombudsman and the Financial Ombudsman.
The positions of: the Commissioner for Human Rights, the Children's Rights Ombudsman and the Financial Ombudsman
are in general favourable to consumers, while the National Bank of Poland and the Polish Financial Supervision
Authority present a more balanced position, including fair principles of treatment of FX mortgage borrowers vis-à-vis
PLN mortgage borrowers, as well as balanced economic aspects regarding solutions for the problem that could be
considered by the Polish Supreme Court.
In the next meeting of the Supreme Court that took place on 2 September 2021, the Court did not address the answers
to the submitted questions and no new meeting date is known.

| 2022 REPORT & ACCOUNTS

446 |
On 12 August 2021, in the case for payment brought by a consumer against Bank Millennium, the CJEU was asked for a
preliminary ruling (C-520/21) whether, in the event that a loan agreement concluded by a bank and a consumer is
deemed invalid from the beginning due to unfair contract terms, the parties, in addition to the reimbursement of the
money paid in contracts (bank - loan capital, consumer - instalments, fees, commissions and insurance premiums) and
statutory interest for delay from the moment of demanding for payment, may also claim any other benefits, including
receivables in particular, remuneration, compensation, reimbursement of costs or valorization of the performance. The
hearing was held on 12 October 2022. The hearing was attended by representatives of Bank Millennium, the consumer's
representative, representatives of the European Commission, the Polish government, the Financial Ombudsman, the
Commissioner for Human Rights, the Polish Financial Supervision Authority and the prosecutor. In its position, the
European Commission opposed granting banks the right to an additional financial benefit for the consumer's use of the
capital provided. At the same time, the Commission concluded that granting consumers the right to an additional
financial benefit will not be contrary to the EU law. The representatives of the Polish government, the Financial
Ombudsman, the Commissioner for Human Rights and the prosecutor also objected to granting banks the right to an
additional benefit. The Chairman of the Polish Financial Supervision Authority pointed out that the essence of the
problem is not the abusiveness of contractual clauses, but the appreciation of the Swiss Franc (CHF) against the zloty
(PLN). In the opinion of the Chairman of the Polish Financial Supervision Authority, banks are entitled to economic
compensation for allowing another entity to use the capital.
Regarding the case C-520/21 which is awaiting decision by the CJEU, whose object essentially concerns possible
compensation for financing when a mortgage loan agreement indexed to foreign currency concluded between a
consumer and a bank is declared void from the beginning due to unfair contract terms, the Advocate General issued an
opinion on 16 February 2023 in the sense that the Article 6 no. 1 and Article 7 no. 1 of Council Directive 93/13/EC of 5
of April 1993, concerning unfair terms in contracts concluded with consumers, must be interpreted as:
- do not preclude a jurisprudential interpretation of national law under which the consumer, in addition to
reimbursement the amounts paid under that contract and paying default interest at the statutory rate from the date of
the reimbursement request, may present additional claims to the bank as a result of that declaration of invalidity. It is
thus a matter for the national court to determine, by reference to its domestic law, whether consumers have the right
to assert claims of that nature and, if so, to rule on their merits.
- preclude a jurisprudential interpretation of national law under which, the Bank in addition to the reimbursement of
the amounts paid under that contract and paying default interest at the statutory rate from the date of the
reimbursement request, may present additional claims against the consumer as a result of that declaration of
invalidity.
If the final decision of the CJEU judge comes in the same direction as that of the Advocate General, this may lead to an
increase in provisions for legal risk related to mortgage loans in CHF, especially if this results in a revision of the
expected influx of new cases in court.
On 9 December 2022, in the case brought by Bank Millennium against the borrower for payment – return of the capital
made available to the borrower on the basis of an invalid capital contract and the equivalent value of the benefit
related to the borrower's use of capital, the court referred a question to the CJEU for a preliminary ruling whether, if it
is found that the loan contract concluded by the bank and the consumer is invalid from the beginning due to the
conclusion of unfair contractual terms, in addition to the return of money paid in the performance of this contract
(loan principal) and statutory late payment interest from the moment of the request for payment, the bank may also
demand any other benefits, including receivables, in particular remuneration, compensation, reimbursement of costs or
valorisation of the benefit. The case was registered under the reference number C-756/22. Referring the question, the
court asked the CJEU to join the case with the above-mentioned ongoing proceedings under reference number
C-520/21. The CJEU decided not to join the cases and simultaneously suspended case C-756/22 up to judgment in case
C- 520/21.
With the scope of settlements between Bank Millennium and borrower following the fall of the loan agreement is also
connected the legal issue directed to the seven-person composition of the Polish Supreme Court (case sign: III CZP
54/21). The date of case review has not been specified yet.

2022 REPORT & ACCOUNTS |

| 447
The Supreme Court was also presented with the issue of whether the loan agreement is a mutual agreement in the light
of the regulations concerning retention right.
On 8 December 2020, Mr. Jacek Jastrzębski, the Chairman of the Polish Financial Supervision Authority (‘PFSA’)
proposed a ‘sector’ solution to address the sector risks related to FX mortgages. The solution would consist in offering
by banks to their clients a voluntary possibility of concluding arrangements based on which a client would conclude
with the bank a settlement as if his/her loan from the very beginning had been a PLN loan bearing interest at an
appropriate WIBOR rate increased by the margin historically employed for such loan.
Following that public announcement, the idea was subject of consultations between banks under the auspices of the
PFSA and Polish Banking Association. Banks in general have assessed the conditions under which such solution could be
implemented and consequent impacts.
As expressed in previous financial reports, when that assessment was done, in the view of the Management Board of
Bank Millennium, important aspects to take into consideration when deciding on potential implementation of such
program were: a) favourable opinion or at least non-objection from important public institutions; b) support from
National Bank of Poland to the implementation; c) level of legal certainty of the settlement agreements to be signed
with the borrowers; d) level of the financial impact on a pre- and after tax basis; e) capital consequences including
regulatory adjustments in the level of capital requirements associated with FX mortgage loans.
Based on current information some of the above-mentioned aspects are not likely to be fully clarified and/or achieved.
Any decision regarding implementation of such program would require the Management Board to submit it to the
Supervisory Board and General Shareholders meeting of Bank Millennium taking into consideration the relevance of such
decision and its implications.
Despite the fact that not all of those aspects have been possible to clarify, Bank Millennium, in practice, has been using
elements of such solution on several individual negotiations with FX mortgage borrowers, including in the course of
court proceedings.
The effect of the Polish Supreme Court's resolution of 7 May 2021 is that Bank Millennium is entitled to a refund of the
cash benefit provided by the bank in performance of a permanently ineffective contract. Taking into account the
uncertainty as to the starting point of the limitation period for the bank's claims, Bank Millennium, in order to protect
its interests, files lawsuits for payment against borrowers in a court dispute with the bank. Bank Millennium's demand
consists of a claim for return of the capital made available to the borrower under the contract and a claim for
reimbursement of the equivalent of the benefit obtained by the borrower in connection with the use of the capital
made available (equivalent to the financial service). By 31 December 2022, Bank Millennium filed over 3,000 lawsuits
against the borrowers. Due to the ongoing proceedings on questions referred for a preliminary ruling (C-520/21,
C-756/22) concerning the scope of claims of the parties to an invalid contract, no final decision has yet been issued in
Bank Millennium's cases containing a substantive assessment of the Bank's claims for reimbursement of benefits related
to the use of capital.
Due to the complexity and uncertainty regarding the outcome of court cases, including counter-claims, as well as from
potential implementation of KNF Chairman solution or other negotiation solutions or from potential Supreme Court
decisions or European Court of Justice decisions, it is difficult to reliably estimate final impacts from different potential
outcomes as at the date of publication of the financial statements.

| 2022 REPORT & ACCOUNTS

448 |
58.Recently issued accounting standards
1 -Recently issued accounting standards and interpretations that came into force in the
current financial year
At the date of approval of these financial statements, the following accounting standards, interpretations, amendments
and revisions were endorsed by the European Union (EU) with mandatory application for the financial year of the Group
started on 1 January 2022:
Amendment to IFRS 3: Reference to the conceptual framework
This amendment aims to update IFRS 3 so that it corresponds to the conceptual framework of 2018, not occurring
significant changes in the requirements of this standard.
There were no material impacts on the application of this amendment in the Group's financial statements.
Amendment to IAS 16: Property, Plant and Equipment — Proceeds before intended use
This amendment prohibits an entity from deducting from the cost of a property, plant or equipment any proceeds
arising from the sale of items produced while the entity prepares the asset to operate as intended, at the location and
necessary conditions. The entity shall recognize any proceeds arising from those sales and the respective costs of
production in the income statement.
There were no material impacts on the application of this amendment in the Group's financial statements.
Amendment to IAS 37: Onerous contracts — Cost of fulfilling a contract
This amendment aims to clarify what costs an entity should consider as related to the fulfilling of a contract when
assessing whether a contract is onerous. It also specifies that the costs of fulfilling a contract correspond only to the
costs directly related to it, which may take the form of incremental costs or of an allocation of other costs directly
related to the fulfilling of the contract.
There were no material impacts on the application of this amendment in the Group's financial statements.
Improvements to international financial reporting standards (cycle 2018-2020)
These improvements comprise the clarification of some aspects related to: IFRS 1 — First-time adoption of International
Financial Reporting Standards: allows a subsidiary that adopts IFRS for the first time to measure cumulative translation
differences based on the amounts presented in the consolidated financial statements of its parent company, according
to the transition date of the parent company to IFRS; IFRS 9 — Financial instruments: clarifies that, when assessing the
derecognition of a financial liability, an entity should only consider fees paid or received between the entity and the
lender, including fees paid or received by one on behalf of the other; IFRS 16 — Leases: amendment to illustrative
example 13 presented in the standard, in order to avoid the emergence of doubts regarding the treatment of lease
incentives; IAS 41 — Agriculture: removal of the requirement to exclude taxation cash flows when measuring the fair
value of a biological asset, thus ensuring consistency with IFRS 13 — Fair value measurement.
There were no material impacts on the application of these improvements in the Group's financial statements.

2022 REPORT & ACCOUNTS |

| 449
2 -Standards, interpretations, amendments and revisions that will take effect in future
financial years
The following standards, interpretations, amendments and revisions, with mandatory application in future financial
years, have been endorsed by the European Union until the date of approval of these financial statements:
IFRS 17 — Insurance contracts (applicable for years beginning on or after 1 January 2023)
This standard establishes, for insurance contracts within its scope, the principles for their recognition, measurement,
presentation and disclosure. This standard replaces IFRS 4 – Insurance contracts.
This accounting standard, although endorsed by the European Union, was not adopted by the Group in 2022 as its
application is not mandatory yet.
Amendment to IAS 8: Definition of accounting estimates (applicable for years beginning on or after 1 January
2023)
This amendment emphasizes how companies should distinguish changes in accounting policies from changes in
accounting estimates, which is relevant since changes in accounting estimates are applied prospectively, only to future
transactions and other events, while changes in accounting policies are generally applied retrospectively to past
transactions and other events.
This amendment, although endorsed by the European Union, was not adopted by the Group in 2022 as its application is
not mandatory yet.
Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of accounting policies (applicable for years
beginning on or after 1 January 2023)
Amendments to IAS 1 require companies to disclose their material accounting policy information rather than their
significant accounting policies, further explaining how an entity can identify a material accounting policy. On the other
hand, Amendments to IFRS Practice Statement 2 provide guidance on how to apply the concept of materiality to
accounting policy disclosures.
These amendments, although endorsed by the European Union, were not adopted by the Group in 2022 as their
application is not mandatory yet.
Amendment to IAS 12: Deferred tax related to assets and liabilities arising from a single transaction (applicable for
years beginning on or after 1 January 2023)
This amendment requires companies to recognise deferred tax on particular transactions that, on initial recognition,
give rise to equal amounts of taxable and deductible temporary differences. The proposed amendment will mostly
apply to transactions such as leases and decommissioning obligations.
This amendment, although endorsed by the European Union, was not adopted by the Group in 2022 as its application is
not mandatory yet.
Amendment to IFRS 17: Initial application of IFRS 17 and IFRS 9 — Comparative information (applicable for years
beginning on or after 1 January 2023)
This amendment is aimed at helping entities to avoid temporary accounting mismatches between financial assets and
insurance contract liabilities by providing insurers with an option for the presentation of comparative information about
financial assets, thus improving the usefulness of comparative information for users of financial statements.
This amendment, although endorsed by the European Union, was not adopted by the Group in 2022 as its application is
not mandatory yet.

| 2022 REPORT & ACCOUNTS

450 |
3 -Standards, interpretations, amendments and revisions not adopted by the European
Union yet
The following standards, interpretations, amendments and revisions, with mandatory application in future financial
years, have not been endorsed by the European Union until the date of approval of these financial statements, and,
therefore, have not been applied by the Group:
Amendment to IAS 1: Classification of liabilities as current or non-current and Classification of liabilities as current
or non-current — Deferral of effective date (applicable for years beginning on or after 1 January 2024)
On 23 January 2020, Amendment to IAS 1: Classification of liabilities as current or non-current was issued, which aims
to clarify that the classification of liabilities as current or non-current should be made based on the existing rights at
the end of the financial reporting period, not being affected by expectations related to the exercise of the right to
defer the settlement of a liability and, additionally, that the settlement corresponds to the extinction of a liability by
transferring cash, equity instruments, other assets or services to a counterparty.
On 15 July 2020, it was decided to postpone by a year the effective date of the referred amendment.
Amendment to IAS 1: Non-current liabilities with covenants (applicable for years beginning on or after 1 January
2024)
This amendment was issued on 31 October 2022 and it clarifies that only covenants with which an entity must comply
on or before the reporting date will affect a liability’s classification as current or non-current.
Amendment to IFRS 16: Lease liability in a sale and leaseback (applicable for years beginning on or after 1 January
2024)
This amendment was issued on 22 September 2022 and it provides changes that specify how a seller-lessee should apply
the subsequent measurement requirements in IFRS 16 to the lease liability that arises in sale and leaseback operations.

2022 REPORT & ACCOUNTS |

| 451
59. List of subsidiary and associated companies of Banco Comercial Português
Group
As at 31 December 2022, the Group's subsidiary companies included in the consolidated accounts using the full
consolidation method were as follows:

|  |  |  |  | Group | Bank
Subsidiary companies | Head office | Share capital | Curre ncy | Sector of activity | % economic interests | % effective held | % direct held
Banco ActivoBank, S.A. | Lisbon | 127,600,000 | EUR | Banking | 100% | 100% | 100%
Bank Millennium, S.A. | Warsaw | 1,213,116,777 | PLN | Banking | 50.1% | 50.1% | 50.1%
Millennium Bank Hipoteczny S.A. | Warsaw | 57,000,000 | PLN | Banking | 100% | 50.1% | —
BCP África, S.G.P.S., Lda. | Funchal | 682,965,800 | EUR | Holding company | 100% | 100% | 100%
BIM - Banco Internacional de Moçambique, S.A. | Maputo | 4,500,000,000 | MZN | Banking | 66.7% | 66.7% | —
BCP Finance Bank, Ltd. | George Town | 246,000,000 | USD | Banking | 100% | 100% | —
BCP International B.V. | Amsterdam | 18,000 | EUR | Holding company | 100% | 100% | 100%
Millennium BCP - Escritório de Representações e Serviços, Ltda. | São Paulo | 70,062,159 | BRL | Financial Services | 100% | 100% | 100%
Millennium bcp Participações, S.G.P.S., Sociedade Unipessoal, Lda. | Funchal | 25,000 | EUR | Holding company | 100% | 100% | 100%
Interfundos - Sociedade Gestora de Organismos de Investimento Coletivo, S.A. | Oeiras | 1,500,000 | EUR | Investment fund management | 100% | 100% | 100%
Monumental Residence - Sociedade Especial de Investimento Imobiliário de Capital Fixo, SICAFI, S.A. | Oeiras | 32,859,181 | EUR | Real-estate management | 100% | 100% | 100%
Millennium bcp - Prestação de Serviços, A.C.E. | Lisbon | 331,750 | EUR | Services | 98.6% | 97.7% | 93.2%
Millennium bcp Teleserviços - Serviços de Comércio Electrónico, S.A. | Lisbon | 50,004 | EUR | E-commerce | 100% | 100% | 100%
Flitptrel Tires, S.A. | Lisbon | 50,000 | EUR | Real-estate company | 100% | 100% | 100%
Bichorro – Empreendimentos Turísticos e Imobiliários S.A. | Oeiras | 2,150,000 | EUR | Real-estate management | 100% | 100% | —
Finalgarve – Sociedade de Promoção Imobiliária Turística, S.A. | Oeiras | 250,000 | EUR | Real-estate management | 100% | 100% | —
Fiparso – Sociedade Imobiliária S.A | Oeiras | 50,000 | EUR | Real-estate company | 100% | 100% | —
Millennium Consulting S.A. | Warsaw | 4,339,500 | PLN | Consulting services | 100% | 50.1% | —
Millennium Goodie Sp.z.o.o. | Warsaw | 500,000 | PLN | Web portals | 100% | 50.1% | —
Millennium Leasing, Sp.z o.o. | Warsaw | 48,195,000 | PLN | Leasing | 100% | 50.1% | —
Millennium Service, Sp.z o.o. | Warsaw | 1,000,000 | PLN | Services | 100% | 50.1% | —
Millennium Financial Services, Sp.z o.o. | Warsaw | 100,000 | PLN | Services | 100% | 50.1% | —
Piast Expert Sp. z o.o (em liquidação) | Tychy | 100,000 | PLN | Marketing services | 100% | 50.1% | —
Millennium Telecommunication Services Sp. z o.o. | Warsaw | 100,000 | PLN | Brokerage services | 100% | 50.1% | —
Millennium TFI - Towarzystwo Funduszy Inwestycyjnych, S.A. | Warsaw | 10,300,000 | PLN | Investment fund management | 100% | 50.1% | —

| 2022 REPORT & ACCOUNTS

452 |
During the 2022 financial year, the Group liquidated its subsidiaries BCP Finance Company, Millennium bcp Bank & Trust
and BCP Capital - Sociedade de Capital de Risco, S.A..
As at 31 December 2022, the investment and venture capital funds included in the consolidated accounts using the full
consolidation method, as referred in the accounting policy presented in note 1 B, were as follows:

|  |  |  |  | Group | Bank
Investment funds | Head office | Participation units | Curre ncy | Activity | % economic interests | % effective held | % direct held
Fundo de Investimento Imobiliário Imosotto Acumulação | Oeiras | 63,550,218 | EUR | Real-estate investment fund | 100% | 100% | 100%
Fundo de Investimento Imobiliário Imorenda | Oeiras | 81,129,598 | EUR | Real-estate investment fund | 100% | 100% | 100%
Fundo Especial de Investimento Imobiliário Oceânico II | Oeiras | 310,307,200 | EUR | Real-estate investment fund | 100% | 100% | 100%
Fundo Especial de Investimento Imobiliário Fechado Sand Capital | Oeiras | 17,678,733,800 | EUR | Real-estate investment fund | 100% | 100% | 100%
Funsita - Fundo Especial de Investimento Imobiliário Fechado | Oeiras | 2,879,000 | EUR | Real-estate investment fund | 100% | 100% | 100%
Fundial – Fundo Especial de Investimento Imobiliário Fechado | Oeiras | 19,164,700 | EUR | Real-estate investment fund | 100% | 100% | 100%
Fundipar – Fundo Especial de Investimento Imobiliário Fechado | Oeiras | 6,875,000 | EUR | Real-estate investment fund | 100% | 100% | 100%
Domus Capital– Fundo Especial de Investimento Imobiliário Fechado | Oeiras | 3,799,969 | EUR | Real-estate investment fund | 95.8% | 95.8% | 95.8%
Predicapital – Fundo Especial de Investimento Imobiliário Fechado (*) | Oeiras | 85,053,991 | EUR | Real-estate investment fund | 60% | 60% | 60%

(*) - Company classified as non-current assets held for sale.
During 2022, the Group proceeded with the liquidation of "Millennium Fundo de Capitalização - Fundo de Capital de
Risco".
The Group holds a securitization transaction regarding mortgage loans which was set through specifically created SPE.
As referred in accounting policy 1 B, when the substance of the relationships with the SPEs indicates that the Group
holds control of its activities, the SPE is fully consolidated, following the application of IFRS 10.
As at 31 December 2022, the Special Purpose Entity included in the consolidated accounts under the full consolidation
method is as follows:

|  |  |  |  | Group | Bank
Special Purpose Entities | Head office | Share capital | Curre ncy | Activity | % economic interests | % effective held | % direct held
Magellan Mortgages No.3 Limited | Dublin | 40,000 | EUR | Special Purpose Entities | 82.4% | 82.4% | 82.4%

2022 REPORT & ACCOUNTS |

| 453
As at 31 December 2022, the Group's associated companies included in the consolidated accounts under the equity
method are as follows:

|  |  |  |  | Group | Bank
Associated companies | Head office | Share capital | Curre ncy | Activity | % economic interests | % effective held | % direct held
Banco Millennium Atlântico, S.A. | Luanda | 53,821,603,000 | AOA | Banking | 22.7% | 22.5% | —
Banque BCP, S.A.S. | Paris | 198,295,587 | EUR | Banking | 19.0% | 19.0% | 19.0%
Lubuskie Fabryki Mebli, S.A. (em liquidação) | Swiebodzin | 13,400,050 | PLN | Furniture manufacturer | 50% | 25.1% | —
SIBS, S.G.P.S., S.A. | Lisbon | 24,642,300 | EUR | Banking services | 23.3% | 21.9% | —
UNICRE - Instituição Financeira de Crédito, S.A. | Lisbon | 10,000,000 | EUR | Credit cards | 32% | 32% | 0.54%
Webspectator Corporation | Delaware | 950 | USD | Digital advertising services | 25.1% | 25.1% | 25.1%

In 2022, the Group sold the investment held in Exporsado - Comércio e Indústria de Produtos do Mar, S.A.
As at 31 December 2022, the Group's associated insurance companies included in the consolidated accounts under the
equity method were as follows:

|  |  |  |  | Group | Bank
Associated companies | Head office | Share capital | Curre ncy | Activity | % economic interests | % effective held | % direct held
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. | Lisbon | 50,002,375 | EUR | Holding company | 49% | 49% | 49%
Ocidental - Companhia Portuguesa de Seguros de Vida, S.A. | Lisbon | 22,375,000 | EUR | Life insurance | 49% | 49% | —
Ageas - Sociedade Gestora de Fundos de Pensões, S.A. | Lisbon | 1,200,000 | EUR | Pension fund management | 49% | 49% | —
Fidelidade Moçambique - Companhia de Seguros S.A.(*) | Maputo | 295,000,000 | MZN | Insurance | 22% | 14.7% | —

In December 2022, Seguradora Internacional de Moçambique, S.A. changed its corporate name to Fidelidade
Moçambique - Companhia de Seguros S.A.
Some indicators of the main subsidiaries and associated companies are analysed as follows:

| 2022 | 2021
Subsidiaries and associated companies | Total Assets | Total Equity | Net income for the year | Total Assets | Total Equity | Net income for the year
Banco ActivoBank, S.A. | 3,271,355 | 213,017 | 19,142 | 2,786,258 | 194,491 | 13,536
Bank Millennium, S.A. (1) | 23,697,447 | 1,173,617 | (216,683) | 22,669,323 | 1,461,037 | (291,927)
BIM - Banco Internacional de Moçambique, S.A. (1) | 2,824,409 | 521,192 | 106,030 | 2,526,707 | 558,904 | 95,566
BCP International B.V. | 524,966 | 524,627 | 87,434 | 976,464 | 976,192 | (361)
BCP Finance Bank, Ltd. | 520,294 | 519,976 | 4,996 | 520,002 | 519,686 | 4,227
BCP África, S.G.P.S., Lda. | 561,713 | 560,269 | 60,975 | 500,105 | 499,294 | (26,955)
Millennium bcp Participações, S.G.P.S., Sociedade Unipessoal, Lda. | 179,441 | 178,297 | 11,406 | 177,258 | 177,244 | 10,353
Interfundos - Sociedade Gestora de Organismos de Investimento Coletivo, S.A. | 9,731 | 8,113 | 2,084 | 9,228 | 7,722 | 2,531
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. (1) (2) | 8,876,759 | 401,717 | 74,425 | 10,693,447 | 820,921 | 69,900
Banco Millennium Atlântico, S.A. (3) | 2,910,070 | 292,893 | 10,693 | 2,712,137 | 296,392 | 11,563
Banque BCP, S.A.S. | 4,944,774 | 268,097 | 23,499 | 4,477,971 | 236,548 | 20,447

1) Consolidated accounts.
2) Includes VOBA annual amortisation. The value of the acquired business (VOBA) corresponds to the estimated current value of the
future cash flows of the contracts in force at the date of acquisition and it is recognised in the consolidated accounts of Millenniumbcp
Ageas Grupo Segurador, S.G.P.S., S.A. as intangible assets and is amortised over the period of recognition of the income associated
with the policies acquired.
3) These indicators correspond to the statutory financial statements that do not include the effects of applying IAS 29.

| 2022 REPORT & ACCOUNTS

454 |
60. Subsequent events
In addition to the aspects disclosed in the other notes and according to the accounting policy 1 Z, the events that
occurred after the date of the financial statements and until the date of its approval, were as follows:
Approval of the application of article 352 (2) of the CRR
On March 24, 2023, BCP was notified of the favourable decision of the supervisory authority on the request for the
application of article 352 (2) of the CRR for the exclusion of the calculation of weighted assets for market risk of
certain structural exchange positions for hedging of regulatory ratios against changes in exchange rates. The change has
an estimated impact on the fully implemented CET1 ratio of around 50 basis points and of around 70 basis points in the
total capital ratio.
Signing of conditional agreement concerning the sale of Millennium Financial Services sp.zo.o.
and strategic insurance cooperation
The Management Board of Bank Millennium S.A. informed that following necessary corporate approvals, on 13 February
2023, Bank Millennium executed the agreement (the "Agreement") for the sale of 80% of the shares (the “Shares”) in
Millennium Financial Services sp. z o.o. (the “Company”) to Towarzystwo Ubezpieczeń na Życie Europa S.A. which
acquires 72% of the Company’s shares and Towarzystwo Ubezpieczeń Europa S.A. which acquires 8% of the Company’s
shares (collectively the "Buyers").
Bank Millennium concluded also with the Buyers and the Company certain agreements concerning exclusive insurance
distribution model, including a cooperation agreement, distribution agreements and agency agreements (the "Strategic
Insurance Cooperation"). The Strategic Insurance Cooperation provides for long term (10 years) bancassurance liaison in
relation specified insurance products linked to loans offered by Bank Millennium.
The essence of the transaction contemplated by the Agreement is the direct acquisition of the Shares by the Buyers
from Bank Millennium for a pre-defined initial price which may be subject to a price adjustment mechanism after the
Transaction is closed, (i.e. after transfer of legal title to the Shares to the Buyers and payment of the Price, "Closing")
and establishment of the Strategic Insurance Cooperation (the "Transaction"). If the Transaction will close successfully,
the Bank expects to recognize an upfront pre-tax gain on the transaction of approximately PLN 500 million (Euros 106.8
million).
The Closing of the Transaction is subject to the fulfilment of a condition precedent – obtaining the relevant consent of
the relevant antimonopoly authority (the "Condition").
Bank Millennium will publish information on the fulfilment or non-fulfilment of the Condition in relevant current
reports. The Parties may also withdraw from the Agreement in certain situations indicated therein and penalties may
apply in case of failure of one of the Parties to fulfil its obligations under the Transaction documentation.
The Transaction documentation contains a certain catalogue of representations and warranties from Bank Millennium
and the Buyers with respect to the Shares and Strategic Insurance Cooperation, as well as sets out the principles of the
Parties' liability thereunder.

2022 REPORT & ACCOUNTS |

| 455
Accounts and Notes to the
Individual Accounts

| 2022 REPORT & ACCOUNTS

456 |
SEPARATE INCOME STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2022 AND 2021

| (Thousands of euros)
| Notes | 2022 | 2021
Interest and similar income | 2 | 1,064,034 | 855,235
Interest expense and similar charges | 2 | (147,703) | (47,442)
NET INTEREST INCOME |  | 916,331 | 807,793
Dividends from equity instruments | 3 | 158,365 | 18,311
Net fees and commissions income | 4 | 534,048 | 489,610
Net gains / (losses) from financial operations at fair value through profit or loss | 5 | 10,420 | (49,849)
Net gains / (losses) from foreign exchange | 5 | 43,430 | 30,890
Net gains / (losses) from hedge accounting operations | 5 | 970 | 4,644
Net gains / (losses) from derecognition of financial assets and liabilities at amortised cost | 5 | 18,414 | (3,593)
Net gains / (losses) from derecognition of financial assets at fair value through other comprehensive income | 5 | (45,411) | 65,889
Other operating income / (losses) | 6 | (62,869) | (49,519)
TOTAL OPERATING INCOME |  | 1,573,698 | 1,314,176
Staff costs | 7 | 326,905 | 425,432
Other administrative costs | 8 | 189,719 | 180,258
Amortisations and depreciations | 9 | 80,051 | 81,639
TOTAL OPERATING EXPENSES |  | 596,675 | 687,329
OPERATING NET INCOME BEFORE PROVISIONS AND IMPAIRMENTS |  | 977,023 | 626,847
Impairment of financial assets at amortised cost | 10 | (213,836) | (272,894)
Impairment of financial assets at fair value through other comprehensive income | 11 | 5,273 | (4,392)
Impairment of other assets | 12 | (12,542) | (52,914)
Other provisions | 13 | (103,901) | (123,801)
NET OPERATING INCOME |  | 652,017 | 172,846
Gains / (losses) arising from sales of subsidiaries and other assets | 14 | 12,826 | 7,524
NET INCOME BEFORE INCOME TAXES |  | 664,843 | 180,370
Income taxes |  |  |
Current | 27 | 2,343 | 1,252
Deferred | 27 | (188,778) | (91,562)
NET INCOME FOR THE YEAR |  | 478,408 | 90,060
Earnings per share (in Euros) |  |  |
Basic | 15 | 0.059 | 0.004
Diluted | 15 | 0.059 | 0.004

CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the separate financial statements.

2022 REPORT & ACCOUNTS |

| 457
SEPARATE STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED 31 DECEMBER 2022 AND 2021

| (Thousands of euros)
| Notes | 2022 | 2021
NET INCOME FOR THE YEAR |  | 478,408 | 90,060
ITEMS THAT MAY BE RECLASSIFIED TO THE |  |  |
INCOME STATEMENT | 39 |  |
Debt instruments at fair value through other comprehensive income |  |  |
Gains / (losses) for the year |  | (225,728) | (27,010)
Reclassification of (gains) / losses to profit or loss (note 5) |  | 45,411 | (65,889)
Cash flows hedging |  |  |
Gains / (losses) for the year |  | (1,642,293) | (329,347)
Fiscal impact |  | 570,476 | 132,141
|  | (1,252,134) | (290,105)
ITEMS THAT WILL NOT BE RECLASSIFIED TO |  |  |
THE INCOME STATEMENT | 39 |  |
Equity instruments at fair value through other comprehensive income |  |  |
Gains / (losses) for the year |  | (13,261) | (670)
Changes in credit risk of financial liabilities at |  |  |
fair value through profit or loss | 39 | (63) | (348)
Actuarial gains / (losses) for the year | 45 | 367,323 | 133,259
Fiscal impact |  | (133,892) | (6,692)
|  | 220,107 | 125,549
Other comprehensive income / (loss) for the year |  | (1,032,027) | (164,556)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |  | (553,619) | (74,496)

CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the separate financial statements.

| 2022 REPORT & ACCOUNTS

458 |
SEPARATE BALANCE SHEET AS AT 31 DECEMBER 2022 AND 2021

(Thousands of euros)
| Notes | 2022 | 2021
ASSETS |  |  |
Cash and deposits at Central Banks | 16 | 2,956,492 | 6,769,061
Loans and advances to credit institutions repayable on demand | 17 | 131,400 | 196,967
Financial assets at amortised cost |  |  |
Loans and advances to credit institutions | 18 | 384,164 | 50,184
Loans and advances to customers | 19 | 37,334,829 | 36,917,137
Debt securities | 20 | 10,255,688 | 7,181,596
Financial assets at fair value through profit or loss |  |  |
Financial assets held for trading | 21 | 692,796 | 894,911
Financial assets not held for trading mandatorily at fair value through profit or loss | 21 | 789,153 | 1,188,309
Financial assets at fair value through other comprehensive income | 21 | 2,914,514 | 8,480,521
Hedging derivatives | 22 | 28,426 | 105,921
Investments in subsidiaries and associated companies | 23 | 2,481,732 | 2,951,246
Non-current assets held for sale | 24 | 257,616 | 522,957
Other tangible assets | 25 | 300,169 | 334,500
Intangible assets | 26 | 77,923 | 55,023
Current tax assets |  | 10,926 | 9,918
Deferred tax assets | 27 | 2,750,881 | 2,503,077
Other assets | 28 | 1,283,266 | 1,165,614
TOTAL ASSETS |  | 62,649,975 | 69,326,942
LIABILITIES |  |  |
Financial liabilities at amortised cost |  |  |
Resources from credit institutions | 29 | 2,244,784 | 11,014,094
Resources from customers | 30 | 49,625,808 | 45,608,375
Non subordinated debt securities issued | 31 | 1,297,551 | 2,745,831
Subordinated debt | 32 | 998,066 | 1,058,528
Financial liabilities at fair value through profit or loss |  |  |
Financial liabilities held for trading | 33 | 187,438 | 200,205
Financial liabilities at fair value through profit or loss | 34 | 1,817,679 | 1,581,778
Hedging derivatives | 22 | 59,548 | 242,900
Provisions | 35 | 363,699 | 364,182
Current tax liabilities |  | 2,027 | 1,853
Other liabilities | 36 | 787,307 | 638,906
TOTAL LIABILITIES |  | 57,383,907 | 63,456,652
EQUITY |  |  |
Share capital | 37 | 3,000,000 | 4,725,000
Share premium | 37 | 16,471 | 16,471
Other equity instruments | 37 | 400,000 | 400,000
Legal and statutory reserves | 38 | 268,534 | 259,528
Reserves and retained earnings | 39 | 1,102,655 | 379,231
Net income for the year |  | 478,408 | 90,060
TOTAL EQUITY |  | 5,266,068 | 5,870,290
TOTAL LIABILITIES AND EQUITY |  | 62,649,975 | 69,326,942

CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the separate financial statements.

2022 REPORT & ACCOUNTS |

| 459
SEPARATE STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED 31 DECEMBER 2022 AND 2021

(Thousands of euros)
| 2022 | 2021
CASH FLOWS ARISING FROM OPERATING ACTIVITIES |  |
Interests received | 963,703 | 905,111
Commissions received | 721,513 | 645,984
Fees received from services rendered | 60,889 | 59,634
Interests paid | (13,268) | (116,971)
Commissions paid | (121,771) | (110,655)
Recoveries on loans previously written off | 6,217 | 8,523
Payments (cash) to suppliers and employees (*) | (636,594) | (712,675)
Income taxes (paid) / received | 1,769 | (4,779)
| 982,458 | 674,172
Decrease / (increase) in operating assets: |  |
Receivables from / (Loans and advances to) credit institutions | (332,692) | 299,071
Loans and advances to customers receivable / (granted) | (847,592) | (2,016,961)
Short term trading securities | 122,529 | 1,931
Increase / (decrease) in operating liabilities: |  |
Loans and advances to credit institutions repayable on demand | 453,017 | (47,810)
Deposits from credit institutions with agreed maturity date | (9,335,071) | 185,993
Loans and advances to customers repayable on demand | 1,330,581 | 4,220,829
Deposits from customers with agreed maturity date | 3,249,209 | (222,498)
| (4,377,561) | 3,094,727
CASH FLOWS ARISING FROM INVESTING ACTIVITIES |  |
Sale of investments held in associated companies | 542,524 | 120,673
Acquisition of shares in subsidiaries and associated companies | (1,208) | 515
Dividends received | 154,482 | 18,391
Interest income from financial assets at fair value through other comprehensive income and at amortised cost | 103,295 | 46,916
Sale of financial assets at fair value through other comprehensive income and at amortised cost | 7,372,586 | 5,233,300
Acquisition of financial assets at fair value through other comprehensive income and at amortised cost | (15,406,563) | (9,638,033)
Maturity of financial assets at fair value through other comprehensive income and at amortised cost | 9,526,056 | 2,179,064
Acquisition of tangible and intangible assets | (67,780) | (40,837)
Sale of tangible and intangible assets | 983 | 1,504
Decrease / (increase) in other sundry assets | (296,144) | 42,142
| 1,928,231 | (2,036,365)
CASH FLOWS ARISING FROM FINANCING ACTIVITIES |  |
Issuance of subordinated debt | 133,700 | 300,000
Reimbursement of subordinated debt | (133,700) | (213,100)
Issuance of debt securities | 350,465 | 998,439
Reimbursement of debt securities | (1,838,664) | (112,685)
Issuance of commercial paper and other securities | 34,505 | 105,708
Reimbursement of commercial paper and other securities | (12,374) | (26,074)
Dividends paid to shareholders of the Bank (note 43) | (13,603) | —
Dividends paid of perpetual subordinated bonds (Additional Tier 1) | (37,000) | (37,000)
Increase / (decrease) in other sundry liabilities (**) | 87,865 | 139,797
| (1,428,806) | 1,155,085
Net changes in cash and equivalents | (3,878,136) | 2,213,447
Cash (note 16) | 340,871 | 345,767
Deposits at Central Banks (note 16) | 6,428,190 | 4,305,005
Loans and advances to credit institutions repayable on demand (note 17) | 196,967 | 101,809
CASH AND EQUIVALENTS AT THE BEGINNING OF THE YEAR | 6,966,028 | 4,752,581
Cash (note 16) | 326,291 | 340,871
Deposits at Central Banks (note 16) | 2,630,201 | 6,428,190
Loans and advances to credit institutions repayable on demand (note 17) | 131,400 | 196,967
CASH AND EQUIVALENTS AT THE END OF THE YEAR | 3,087,892 | 6,966,028

(*) In 2022, this balance includes the amount of Euros 30,000 (31 December 2021: Euros 95,000) related to short-term lease contracts and the amount of
Euros 1,742,000 (31 December 2021: Euros 1,937,000) related to lease contracts of low value assets.
(**) In 2022, this balance includes the amount of Euros 19,592,000 (31 December 2021: Euros 18,696,000) corresponding to payments of lease liabilities’
shares of capital.
CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the separate financial statements.

| 2022 REPORT & ACCOUNTS

460 |
SEPARATE STATEMENT OF CHANGES IN EQUITY
FOR THE YEARS ENDED 31 DECEMBER 2022 AND 2021

(Thousands of euros)
| Share capital | Share premium | Other equity instruments | Legal and statutory reserves | Reserves and retained earnings | Net income for the year | Total equity
BALANCE AS AT 31 DECEMBER 2020 | 4,725,000 | 16,471 | 400,000 | 254,464 | 535,218 | 50,633 | 5,981,786
Net income for the year | — | — | — | — | — | 90,060 | 90,060
Other comprehensive income | — | — | — | — | (164,556) | — | (164,556)
TOTAL COMPREHENSIVE INCOME | — | — | — | — | (164,556) | 90,060 | (74,496)
Results applications: |  |  |  |  |  |  |
Legal reserve (note 38) | — | — | — | 5,064 | (5,064) | — | —
Transfers for Reserves and retained earnings | — | — | — | — | 50,633 | (50,633) | —
Interests of the perpetual subordinated bonds (Additional Tier 1) | — | — | — | — | (37,000) | — | (37,000)
BALANCE AS AT 31 DECEMBER 2021 | 4,725,000 | 16,471 | 400,000 | 259,528 | 379,231 | 90,060 | 5,870,290
Net income for the year | — | — | — | — | — | 478,408 | 478,408
Other comprehensive income | — | — | — | — | (1,032,027) | — | (1,032,027)
TOTAL COMPREHENSIVE INCOME | — | — | — | — | (1,032,027) | 478,408 | (553,619)
Results applications: |  |  |  |  |  |  |
Legal reserve (note 38) | — | — | — | 9,006 | (9,006) | — | —
Transfers for Reserves and retained earnings | — | — | — | — | 90,060 | (90,060) | —
Dividends paid (note 43) | — | — | — | — | (13,603) | — | (13,603)
Interests of the perpetual subordinated bonds (Additional Tier 1) | — | — | — | — | (37,000) | — | (37,000)
Share capital reduction | (1,725,000) | — | — | — | 1,725,000 | — | —
BALANCE AS AT 31 DECEMBER 2022 | 3,000,000 | 16,471 | 400,000 | 268,534 | 1,102,655 | 478,408 | 5,266,068

CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the separate financial statements.

2022 REPORT & ACCOUNTS |

| 461
1.Accounting policies
A.Basis of presentation
Banco Comercial Português, S.A. (the 'Bank') is a private capital bank, established in Portugal in 1985. It started
operating on 5 May 1986, and these separate financial statements reflect the results of the operations of the Bank for
the years ended on 31 December 2022 and 2021.
In accordance with Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of 19 July 2002, and
Bank of Portugal Notice no. 5/2015 (which revoked Bank of Portugal Notice no. 1/2005), the Bank’s separate financial
statements are required to be prepared in accordance with International Financial Reporting Standards (IFRS), as
endorsed by the European Union (EU), since 2016. IFRS comprise accounting standards issued by the International
Accounting Standards Board (IASB), as well as interpretations issued by the International Financial Reporting
Interpretations Committee (IFRIC) and its predecessor bodies. The separate financial statements and the accompanying
notes were approved on 27 March 2023 by the Bank's Board of Directors and are presented in thousands of euros,
rounded to the nearest thousand.
All the references in this document related to any normative always report to the respective current version.
The separate financial statements for the year ended on 31 December 2022 were prepared for the purpose of
recognition and measurement, in accordance with the IFRS approved by the EU that are effective on that date.
These separate financial statements are a translation of the financial statements originally issued in Portuguese. In the
event of discrepancies, the Portuguese version prevails.
A1.Comparative information
The Bank has adopted IFRS and interpretations mandatory for accounting periods beginning on or after 1 January 2022.
The accounting policies are consistent with those used in the preparation of the financial statements of the previous
period.
The Bank's financial statements were prepared under the going concern assumption, the accrual-based accounting
regime and under the historical cost convention, as modified by the application of fair value for derivative financial
instruments, financial assets and liabilities at fair value through profit or loss and financial assets at fair value through
other comprehensive income. Financial assets and liabilities that are covered under hedge accounting are stated at fair
value in respect of the risk that is being hedged, if applicable. Other financial assets and liabilities and non-financial
assets and liabilities are stated at amortised cost or historical cost. Non-current assets and disposal groups held for sale
are stated at the lower of carrying amount or fair value less costs to sell. The liability for defined benefit obligations is
recognised as the present value of the past liabilities with pensions net of the value of the fund's assets.
The preparation of the financial statements in accordance with IFRS requires the Board of Directors, under advice of
the Executive Committee, to make judgments, estimations and assumptions that affect the application of the
accounting policies and reported amounts of assets, liabilities, income and expenses. The estimations and associated
assumptions are based on historical experience and other factors that are believed to be reasonable under the
circumstances and form the basis for making the judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these estimations. The issues involving a higher
degree of judgment or complexity or for which assumptions and estimations are significant are presented in note 1.X.

| 2022 REPORT & ACCOUNTS

462 |
B.Financial instruments (IFRS 9)
B1.Financial assets
B1.1.Classification, initial recognition and subsequent measurement
At the initial recognition, financial assets are classified into one of the following categories:
- “Financial assets at amortised cost”;
–“Financial assets at fair value through other comprehensive income”; or,
–“Financial assets at fair value through profit or loss”.
The classification is made taking into consideration the following aspects:
–the Bank's business model for the management of the financial asset; and,
–the characteristics of the contractual cash flows of the financial asset.
Business Model Evaluation
With reference to 1 January 2018, the Bank carried out an evaluation of the business model in which the financial
instruments are held at portfolio level, since this approach reflects how assets are managed and how that information
is made available to management bodies. The information considered in this evaluation included:
–the policies and purposes established for the portfolio and the practical operability of these policies, including how
the management strategy focuses on receiving contractual interest, maintaining a certain interest rate profile,
adjusting the duration of financial assets to the duration of liabilities that finance these assets or on the realization
of cash flows through the sale of the assets;
–how the performance of the portfolio is evaluated and reported to the Bank's management bodies;
–the evaluation of the risks that affect the performance of the business model (and of the financial assets held under
this business model) and the way these risks are managed;
–the remuneration of business managers, i.e., in what way the compensation depends on the fair value of the assets
under management or on contractual cash flows received; and,
–the frequency, volume and sales periodicity in previous periods, the reasons for these sales and the expectations
about future sales. However, sales information should not be considered individually, but as part of an overall
assessment of how the Bank establishes financial asset management objectives and how cash flows are obtained.
Financial assets held for trading and financial assets managed and evaluated at fair value by option are measured at
fair value through profit or loss because they are not held either for the collection of contractual cash flows (HTC), nor
for the collection of cash flows and sale of these financial assets (HTC and Sell).
Evaluation if the contractual cash flows correspond to Solely Payments of Principal and Interest (SPPI)
For the purposes of this assessment, "principal" is defined as the fair value of the financial asset at initial recognition.
"Interest" is defined as the counterparty for the time value of money, for the credit risk associated with the amount
owed over a given period of time and for other risks and costs associated with the activity (e.g., liquidity risk and
administrative costs), as well as for a profit margin.
In the evaluation of the financial instruments in which contractual cash flows refer exclusively to the receipt of
principal and interest, the Bank considered the original contractual terms of the instrument. This evaluation included
the analysis of the existence of situations in which the contractual terms can modify the periodicity and the amount of
the cash flows so that they do not fulfil the SPPI condition. In the evaluation process, the Bank considered:
–contingent events that may change the periodicity and the amount of the cash flows;
–characteristics that result in leverage;
–terms of prepayment and extension of maturity;
–terms that may limit the right of the Bank to claim cash flows in relation to specific assets (e.g., contracts with
terms that prevent access to assets in case of default – non-recourse asset); and,
–characteristics that may change the time value of money.

2022 REPORT & ACCOUNTS |

| 463
In addition, an advance payment is consistent with the SPPI criterion if:
–the financial asset is acquired or originated with a premium or discount in relation to the contractual nominal value;
–the prepayment represents substantially the nominal amount of the contract plus accrued contractual interest, but
not paid (may include reasonable compensation for prepayment); and,
–the prepaid fair value is insignificant at initial recognition.
B1.1.1.Financial assets at amortised cost
Classification
A financial asset is classified under the category "Financial assets at amortised cost" if both of the following conditions
are met:
–the financial asset is held within a business model whose objective is to hold financial assets in order to collect their
contractual cash flows; and,
–its contractual cash flows occur on specific dates and are solely payments of principal and interest on the principal
amount outstanding (SPPI).
The "Financial assets at amortised cost" category includes loans and advances to credit institutions, loans and advances
to customers and debt instruments managed based on a business model whose purpose is to receive their contractual
cash flows (government bonds, bonds issued by companies and commercial paper).
Initial recognition and subsequent measurement
Loans and advances to credit institutions and loans and advances to customers are recognised at the date the funds are
made available to the counterparty (settlement date). Debt instruments are recognised on the trade date, that is, on
the date the Bank accepts to acquire them.
Financial assets at amortised cost are initially recognised at fair value plus transaction costs and are subsequently
measured at amortised cost. In addition, they are subject, at their initial recognition, to the measurement of
impairment losses for expected credit losses (note B1.5), which are recognised in "'Impairment of financial assets
measured at amortised cost".
Interest of financial assets at amortised cost is recognised under "Interest and similar income", based on the effective
interest rate method and in accordance with the criteria described in note B3.
Gains or losses generated at the time of derecognition are registered in "Gains/(losses) with derecognition of financial
assets and liabilities at amortised cost".
B1.1.2.Financial assets at fair value through other comprehensive income
Classification
A financial asset is classified under the category of "Financial assets at fair value through other comprehensive income"
if both of the following conditions are met:
–the financial asset is held within a business model whose objective is both to collect its contractual cash flows and
to sell this financial asset; and,
–its contractual cash flows occur on specific dates and are solely payments of principal and interest on the principal
amount outstanding (SPPI).
In addition, at the initial recognition of an equity instrument that is not held for trading, nor a contingent retribution
recognised by an acquirer in a business combination to which IFRS 3 applies, the Bank may irrevocably choose to
classify it in the category of "Financial assets at fair value through other comprehensive income" (FVOCI). This option is
exercised on a case-by-case basis and is only available for financial instruments that comply with the definition of
equity instruments provided in IAS 32 and cannot be used for financial instruments whose classification as an equity
instrument under the scope of the issuer is made under the exceptions provided in paragraphs 16A to 16D of IAS 32.

| 2022 REPORT & ACCOUNTS

464 |
Initial recognition and subsequent measurement
Debt instruments at fair value through other comprehensive income are initially recognised at fair value plus
transaction costs and are subsequently measured at fair value. Changes in the fair value of these financial assets are
recognised against other comprehensive income and, at the time of their disposal, the respective gains or losses
accumulated in other comprehensive income are reclassified to a specific income statement item designated "Gains or
losses on derecognition of financial assets at fair value through other comprehensive income”.
Debt instruments at fair value through other comprehensive income are also subject, from their initial recognition, to
the measurement of impairment losses for expected credit losses (note B1.5). Impairment losses are recognised in the
income statement under "Impairment of financial assets at fair value through other comprehensive income", against
“Other comprehensive income”, and do not reduce the carrying amount of the financial asset in the balance sheet.
Interest, premiums or discounts on financial assets at fair value through other comprehensive income are recognised in
"Interest and similar income", based on the effective interest rate method and in accordance with the criteria described
in note B3.
Equity instruments at fair value through other comprehensive income are initially recognised at fair value plus
transaction costs and are subsequently measured at fair value. The changes in the fair value of these financial assets
are recognised against “Other comprehensive income”. Dividends are recognised in the income statement when the
right to receive them is attributed.
Impairment is not recognised for equity instruments at fair value through other comprehensive income, and the
respective accumulated gains or losses recognised in “Fair value changes” are transferred to “Retained earnings” at the
time of their derecognition.
B1.1.3.Financial assets at fair value through profit or loss
Classification
A financial asset is classified in the category "Financial assets at fair value through profit and loss" if the business model
defined by the Bank for its management or the characteristics of its contractual cash flows do not meet the conditions
described above to be measured at amortised cost or at fair value through other comprehensive income (FVOCI).
In addition, the Bank may irrevocably designate a financial asset at fair value through profit or loss that meets the
criteria to be measured at amortised cost or at FVOCI at the time of its initial recognition if this eliminates or
significantly reduces an inconsistency in measurement or recognition (accounting mismatch), that will otherwise arise
from measuring assets or liabilities or recognising their gains and losses in different bases.
The Bank classified "Financial assets at fair value through profit and loss" in the following items:
a)“Financial assets held for trading”
These financial assets are acquired with the purpose of short-term selling; at the initial recognition, they are part of a
portfolio of identified financial instruments and for which there is evidence of profit-taking in the short-term; or they
can be defined as derivatives (except for hedging derivatives).
b)“Financial assets not held for trading mandatorily at fair value through profit or loss”
This item classifies debt instruments whose contractual cash flows do not correspond only to repayments of principal
and interest on the principal amount outstanding (SPPI).
c)“Financial assets designated at fair value through profit or loss”
This item includes the financial assets that the Bank has chosen to designate at fair value through profit or loss to
eliminate accounting mismatch.

2022 REPORT & ACCOUNTS |

| 465
Initial recognition and subsequent measurement
Considering that the transactions carried out by the Bank in the normal course of its business are in market conditions,
financial assets at fair value through profit or loss are initially recognised at their fair value, with the costs or income
associated with the transactions recognised in profit and loss at the initial moment. Subsequent changes in the fair
value of these assets are recognised in profit and loss.
The accrual of interest and of the premium/discount (when applicable) is recognised in "Net interest income", based on
the effective interest rate of each transaction, except the accrual of interest from trading derivatives that are
recognised in “Gains/(losses) on financial operations at fair value through profit or loss”. Dividends are recognised in
profit and loss when the right to receive them is attributed.
Trading derivatives with a positive fair value are included in the item "Financial assets held for trading", while trading
derivatives with negative fair value are included in "Financial liabilities held for trading".
B1.2.Reclassification between categories of financial assets
Financial assets should be reclassified into other categories only if the business model used in their management has
changed. In this case, all financial assets affected must be reclassified.
The reclassification must be applied prospectively from the date of reclassification and any gains, losses (including the
ones related to impairment) or interest previously recognised should not be restated.
The reclassification of investments in equity instruments measured at fair value through other comprehensive income is
not allowed, nor of financial instruments designated at fair value through profit or loss.
B1.3.Modification and derecognition of financial assets
General principles
i)The Bank shall derecognise a financial asset when, and only when:
–the contractual rights to the cash flows from the financial asset expire; or,
–it transfers the financial asset as set out in notes ii) and iii) below and the transfer qualifies for derecognition in
accordance with note iv).
ii)The Bank transfers a financial asset if, and only if, it either:
–transfers the contractual rights to receive the cash flows of the financial asset; or,
–retains the contractual rights to receive the cash flows of the financial asset but assumes a contractual obligation to
pay the cash flows to one or more recipients in an arrangement that meets the conditions presented in note iii).
iii)When the Bank retains the contractual rights to receive the cash flows of a financial asset (the 'original asset'), but
assumes a contractual obligation to pay these cash flows to one or more entities (the 'eventual recipients'), the Bank
shall treat the transaction as a transfer of a financial asset if all the following three conditions are met:
–the Bank does not have any obligation to pay amounts to the eventual recipients, unless it collects equivalent
amounts from the original asset. Short-term advances with the right of full recovery of the amount lent, plus
accrued interest at market rates, do not violate this condition;
–the Bank is contractually prohibited from selling or pledging the original asset other than as a security to the
eventual recipients due its obligation to pay them cash flows; and,
–the Bank has an obligation to remit any cash flows it collects on behalf of the eventual recipients without material
delay. In addition, it is not entitled to reinvest such cash flows, except for investments in cash or cash equivalents
(as defined in IAS 7 – Statement of Cash Flows) during the short settlement period from the collection date until the
date of required remittance to the eventual recipients, and interest earned on such investments is passed to the
eventual recipients.
iv)When the Bank transfers a financial asset (see note ii) above), it shall evaluate the extent to which it retains the
risks and benefits arising from owning the financial asset. In this case:
–if the Bank transfers substantially all the risks and benefits arising from owning the financial asset, it shall
derecognise the financial asset and recognise separately any rights and obligations created or retained in the
transfer, as assets or liabilities;
–if the Bank retains substantially all the risks and benefits arising from owning the financial asset, it shall continue to
recognise the financial asset;

| 2022 REPORT & ACCOUNTS

466 |
–if the Bank neither transfers nor retains substantially all the risks and benefits arising from owning the financial
asset, it shall determine whether it retained control of the financial asset. In this case:
a)if the Bank did not retain control, it shall derecognise the financial asset and recognise separately, as assets or
liabilities, any rights and obligations created or retained in the transfer;
b)if the Bank retained control, it shall continue to recognise the financial asset to the extent of its continued
involvement in the financial asset.
v)The transfer of risks and benefits (see prior note) is evaluated by comparing the Bank’s exposure, before and after
the transfer, with the variability in the amounts and timing of the net cash flows of the transferred asset.
vi)The question of whether the Bank retained or not control (see note iv) above) over the transferred asset depends on
the transferee's ability to sell the asset. If the transferee has the practical ability to sell the asset in its entirety to
an unrelated third party and can exercise that ability unilaterally without needing to impose additional restrictions
on the transfer, the entity did not retain control. In all other cases, the entity retained control.
Derecognition criteria
In the context of the general principles listed in the previous section, and considering that contract modification
processes may lead, in some circumstances, to the derecognition of the original financial assets and recognition of new
ones (subject to POCI identification), the purpose of this section is to set the criteria and circumstances that may lead
to the derecognition of a financial asset.
The Bank considers that a modification of the terms and conditions of a credit exposure will result in derecognition of
the transaction and in recognition of a new transaction when the modification translates into at least one of the
following conditions:
–creation of a new exposure that results from a debt consolidation, without any any of the derecognized instruments
having a nominal value higher than 90% of the nominal amount of the new instrument;
–Double extension of the residual maturity, provided that the extension is not shorter than 3 years compared to the
residual maturity in the moment of the modification;
–Increase of on balance exposure by more than 10% compared to the nominal amount (refers to the last approved
amount on the operation subject to modification);
–Change in qualitative features, namely:
i) Change of currency, unless the exchange rate between the old and the new currency is pegged or managed within
limits restricted by law or the relevant monetary authorities;
ii) Exclusion or addition of a substantial equity conversion feature to a debt instrument, unless it is not reasonably
possible that it will be exercised over its term;
iii) Transfer of the instrument’s credit risk to another borrower, or a significant change in the structure of
borrowers within the instrument.
iv) Deletion or addition to the debt instrument of features of the "Pay If You Can" type or dependent on the financial
performance of the debt instrument.
In the case of a restructuring due to financial difficulties of the debtor, only the criteria set out in items ii, iii and iv of
the above paragraph should be checked (the other criteria listed in this paragraph are not relevant in such situations).

2022 REPORT & ACCOUNTS |

| 467
Loans written-off
The Bank writes off a loan when it does not have reasonable expectations of recovering a financial asset in its entirety
or partially. Loans written-off are recognised in off-balance sheet accounts.
B1.4.Purchased or originated credit-impaired assets
Purchased or originated credit-impaired (POCI) assets are assets that present objective evidence of credit impairment
in the moment of their initial recognition. An asset is credit-impaired if one or more events have occurred with a
negative impact on the estimated future cash flows of the asset.
The two events that lead to the origin of a POCI exposure are presented as follows:
–financial assets arising from a recovery process, where there have been changes to the terms and conditions of the
original agreement, which presented objective evidence of impairment that resulted in its derecognition (note B1.3)
and recognition of a new contract that reflects the credit losses incurred;
–financial assets acquired with a significant discount, where the existence of a significant discount reflects credit
losses incurred at the time of their initial recognition.
At initial recognition, POCI assets do not carry an impairment allowance. Instead, lifetime expected credit losses (ECL)
are incorporated into the calculation of the effective interest rate (EIR). Consequently, at initial recognition, the gross
book value of POCI (initial balance) is accounted for at fair value and it's equal to the net book value before being
recognised as POCI (difference between the initial balance and the total discounted cash flows).
B1.5.Impairment losses
B1.5.1.Financial instruments subject to impairment losses recognition
The Bank recognises impairment losses for expected credit losses on financial instruments recognised in the following
accounting items:
B1.5.1.1.Financial assets at amortised cost
Impairment losses on financial assets at amortised cost reduce the balance sheet value of these financial assets against
the item "Impairment of financial assets at amortised cost" (in the income statement).
B1.5.1.2.Debt instruments at fair value through other comprehensive income
Impairment losses for debt instruments at fair value through other comprehensive income are recognised in the income
statement under "Impairment of financial assets at fair value through other comprehensive income", against other
comprehensive income (they do not reduce the balance sheet amount of these financial assets).
B1.5.1.3.Credit commitments, documentary credits and financial guarantees
Impairment losses associated with credit commitments, documentary credits and financial guarantees are recognised in
liabilities, under the balance "Provisions for guarantees and other commitments", against "Other provisions" (in the
income statement).
B1.5.2.Classification of financial instruments by stages
Changes in credit risk since the initial recognition

| Stage 1 | Stage 2 | Stage 3
Classification criterion | Initial recognition | Significant increase in credit risk since initial recognition | Impaired
Impairment losses | 12-month expected credit losses | Lifetime expected credit losses

| 2022 REPORT & ACCOUNTS

468 |
The Bank determines the expected credit losses of each operation as a result of the deterioration of credit risk since its
initial recognition. For this purpose, operations are classified into one of the following three stages:
–Stage 1: the operations in which there is no significant increase in credit risk since its initial recognition are
classified in this stage. Impairment losses associated with operations classified in this stage correspond to expected
credit losses resulting from a default event that may occur within 12 months after the reporting date (12-month
expected credit losses);
–Stage 2: the operations in which there is a significant increase in credit risk since its initial recognition (note B1.5.3)
but are not impaired (note B1.5.4) are classified in this stage. Impairment losses associated with operations
classified in this stage correspond to the expected credit losses resulting from default events that may occur over
the expected residual life of the operations (lifetime expected credit losses);
–Stage 3: impaired operations are classified in this stage. Impairment losses associated with operations classified at
this stage correspond to lifetime expected credit losses.
B1.5.3.Significant increase in credit risk (SICR)
Significant increase in credit risk (SICR) is determined according to a set of mostly quantitative, but also qualitative
criteria. These criteria are mainly based on the risk grades of customers, according to the Bank's Rating Master Scale,
and on its evolution, in order to detect significant increases in Probability of Default (PD), complemented by other
information regarding the customers’ behaviour towards the financial system.
B1.5.4.Definition of financial assets in default and impaired
All customers who meet at least one of the following conditions are marked as default and, consequently, in NPE:
a) Delay over 90 days of material payment:
- Amounts of principal, interest or fees not paid on the due date that, cumulatively, represent:
i) more than Euros 100 (retail) or more than Euros 500 (non-retail); and,
ii) more than 1% of the total debt (direct liabilities).
After these two conditions are met, the counting of days of delay begins: if more than 90 consecutive days in which the
customer is in this situation have been counted, it is classified as default (or GR15).
The existence of a material payment delay gives rise to the default setting (GR15) of all holders of the operation (or
operations).
b) Signs of low probability of payment:
i.Credit restructuring due to financial difficulties with loss of value;
ii.Delay after restructuring due to financial difficulties;
iii.Recurrence of restructuring due to financial difficulties;
iv.Credit with signs of impairment (or stage 3 of IFRS 9);
v.Insolvency or equivalent proceedings;
vi.Litigation;
vii.Guarantees of operations in default;
viii.Credit sales with losses;
ix.Credit fraud;
x.Unpaid credit status;
xi.Breach of covenants in a credit agreement;
xii.Spread of default in an economic group;
xiii.Cross default in BCP Group.

2022 REPORT & ACCOUNTS |

| 469
B1.5.5.Estimates of expected credit losses - Individual analysis
1.Customers who are in one of the following conditions are subject to individual analysis:

Customers in default | Customers in litigation or insolvency, if the total exposure of the group members in these situations exceeds Euros 1 million
Customers integrated into groups with an exposure over Euros 5 million, if they have a risk grade 15
Groups or customers who are not in default | Other customers belonging to groups in the above conditions
Groups or customers with an exposure over Euros 5 million, if a group member has a risk grade 14
Groups or customers with an exposure over Euros 5 million, if a member of the group has a restructured loan and a risk grade 13
Groups or customers with an exposure over Euros 10 million, if at least one member of the group is in stage 2
Groups or customers not included in the preceding paragraphs, whose exposure exceeds Euros 25 million

2.Regardless of the criteria described in the previous point, the individual analysis is only performed for customers
with a credit exposure over Euros 500,000, while customers with exposure below this limit are not considered for
the purpose of determining the exposure referred to in the previous point.
3.Other customers that do not meet the criteria defined in 1 will also be subject to individual analysis, if under the
following conditions:
–they have impairment as a result of the latest individual analysis;
–according to recent information, they show a significant deterioration in risk levels; or,
–are a Special Purpose Vehicle (SPV).
4.The individual analysis includes the following procedures:
–for customers that are not in default, the analysis of financial difficulties indicators to determine whether the
customer has objective signs of impairment, or whether it should be classified in stage 2 given the occurrence of a
significant increase in credit risk, considering for this purpose a set of predetermined signs;
–for customers in default or for which the previous analysis has allowed to conclude that the customer has objective
signs of impairment, determination of the loss.
5.The individual analysis is the responsibility of the departments in charge of customer management and of the Credit
Department, the latter in respect to the customers managed by the Commercial Networks.
The assessment of existence of impairment losses in individual terms is determined through an analysis of the total
credit exposure on a case-by-case basis. For each loan considered individually significant, the Bank assessed, at
each balance sheet date, the existence of objective evidence of impairment. In the assessment of impairment
losses in individual terms, the following factors were considered:
–total exposure of each customer towards the Bank and the existence of overdue loans;
–viability of the customer’s business and its capacity to generate enough cash flows to service debt obligations in the
future;
–the existence, nature and estimated value of the collaterals associated to each loan;
–significant deterioration of the customer's rating;
–the customer’s available assets in liquidation or insolvency situations;
–the existence of preferential creditors;
–the amount and expected recovery term.
6.Each of the units referred to in the previous point is responsible for assigning an expectation and a recovery period
to exposures relating to customers subject to individual analysis, which must be transmitted to the Risk Office as
part of the regular process of collecting information, accompanied by detailed justification of the proposed
impairment.
7.The expected recovery shall be represented by a recovery rate of the total outstanding exposure, which may be a
weighted rate considering the different recovery prospects for each part of the customer's liabilities.

| 2022 REPORT & ACCOUNTS

470 |
8.The recovery estimation referred to in the previous point should be influenced by future prospects (forward-
looking), contemplating not only a more expected scenario but also alternative scenarios (an unbiased and
probability-weighted amount). The application and weighting of the scenarios should be carried out both in a global
perspective and in an individualized perspective, the latter when cases that, due to their specificity, have a high
degree of uncertainty regarding the expected recovery estimation are identified.
9.The macroeconomic adjustment set out in point 8 should be analysed annually and weighted according to the type
of recovery strategy associated with the exposure under analysis:
–for Going Concern strategies (i.e., the estimation is based on the cash flows of the business), the possibility of
applying the 2 additional macroeconomic scenarios (optimistic and pessimistic) should be analysed in a global way,
to ascertain if there is the risk of a skewed view of the expected losses from the consideration of only one scenario;
–for Gone Concern strategies (i.e., the recovery estimation is based on the realization of the collateral), the impact
of the macroeconomic scenario on collaterals should be analysed, for example, to what extent the projected real
estate index indicates significant changes ahead for the current valuation values.
10.It is the responsibility of the units referred to in point 5 to consider in their projection macroeconomic expectations
that may influence the recoverability of the debt.
11.For the purposes of the preceding paragraphs, the Economic Studies, Sustainability and Cryptoassets Department
shall disclose the macroeconomic data that allow the estimations to be made.
12.The decision to consider global impacts related to the going and gone concern scenarios should be made by the Risk
Committee, as proposed by the Risk Office.
13.For specific cases with a high degree of uncertainty, the allocation of alternative scenarios should be considered
casuistically. Examples of recovery situations with a degree of uncertainty include:
–recovery of collateral in geographies in which the Bank has no relevant recovery experience;
–recovery of debt related to geographies in which there is strong political instability;
–recovery of non-real estate collateral for which there is no evidence of market liquidity;
–recovery of related collateral or government guarantees in a currency other than the country's own;
–recovery of debt related to debtors for whom there is a strong negative public exposure.
14.The Risk Office is responsible for reviewing the information collected and for clarifying all identified
inconsistencies, as well as for the final decision on the customer's impairment.
15.Customers that have objective signs of impairment, but an individual impairment amount is equal to zero, are
included in the collective analysis, assuming a PD 12 months equivalent to the risk grade of 12 of Master Scale.
16.The individual impairment analysis must be carried out at least annually. In case significant signs of deterioration or
improvement in the customer’s economic and financial situation are detected, as well as the macroeconomic
conditions affecting the customer's ability to accomplish debt, it is the responsibility of the Risk Office to promote
the review of the expected impairment of this customer.
B1.5.6.Estimates of expected credit losses - Collective analysis
Transactions that are not subject to an individual impairment analysis are grouped considering their risk characteristics
and subject to a collective impairment analysis. The Bank's credit portfolio is divided by internal risk grades and
according to the following segments:
a)Segments with a reduced history of defaults, designated ‘low default’: Large corporate exposures, Project finance,
Institutions (banks/financial institutions) and Sovereigns;
b)Segments not ‘low default’: - Retail: Mortgages; Overdrafts; Credit cards; Small and medium enterprises - Retail
(‘SME Retail’); and Others - Corporate: Small and medium enterprises - Corporate (‘Large SME’); and Real Estate.
The Bank performs statistical tests in order to prove the homogeneity of the segments mentioned above, with a
minimum period of one year.

2022 REPORT & ACCOUNTS |

| 471
Expected credit losses are estimates of credit losses that are determined as follows:
–financial assets with no signs of impairment at the reporting date: the present value of the difference between the
contractual cash flows and the cash flows that the Bank expects to receive;
–financial assets with impairment at the reporting date: the difference between the gross book value and the present
value of the estimated cash flows;
–unused credit commitments: the present value of the difference between the resulting contractual cash flows if the
commitment is made and the cash flows that the Bank expects to receive;
–financial guarantees: the current value of the expected repayments less the amounts that the Bank expects to
recover.
The main inputs used to measure ECLs on a collective basis should include the following variables:
–Probability of Default – PD;
–Loss Given Default – LGD; and,
–Exposure at Default – EAD.
These parameters are obtained through internal statistical models and other relevant historical data, considering the
already existing regulatory models adapted to the requirements of IFRS 9.
PDs are estimated based on a certain historical period and will be calculated based on statistical models. These models
are based on internal data including both quantitative and qualitative factors. If there is a change in the risk of the
counterparty or exposure, the estimate of the associated PD will also vary. The PDs will be calculated considering the
contractual maturities of exposures.
The risk grades are a highly relevant input for determining the PD associated with each exposure.
The Bank collects performance and default indicators about their credit risk exposures with analysis by types of
customers and products.
LGD is the magnitude of the loss that is expected to occur if an exposure goes into default. The Bank estimates the LGD
parameters based on the historical recovery rates after entry into counterparty defaults. The LGD models consider the
associated collaterals, the counterparty activity sector, the default time, as well as the recovery costs. In the case of
contracts secured by real estate, it is expected that the LTV (loan-to-value) ratios are a parameter of high relevance in
the determination of LGD.
The EAD represents the expected exposure if the exposure and/or customer defaults. The Bank obtains the EAD values
from the counterparty's current exposure and potential changes to its current value as a result of the contractual
conditions, including amortisations and prepayments. For commitments and financial guarantees, the value of the EAD
will consider both the amount of credit used and the expectation of future potential value that may be used in
accordance with the agreement.
As described above, with the exception of financial assets that consider a 12-month PD as they do not present a
significant increase in credit risk, the Bank will calculate the ECL value considering the risk of default during the
maximum contractual maturity period of the contract, even if, for the purpose of risk management, it is considered to
be a longer period. The maximum contractual period shall be considered as the period up to the date on which the
Bank has the right to require payment or end the commitment or guarantee.
The Bank adopted as a residual term criterion for renewable operations, when in stage 2, a term of 5 years. This term
was determined based on the behavioural models of this type of product applied by the Bank in the liquidity risk and
interest rate (ALM) analysis. According to these models, the maximum period of repayment of these operations is the 5
years considered conservatively in the scope of the calculation of credit impairment.

| 2022 REPORT & ACCOUNTS

472 |
The Bank uses models to forecast the evolution of the most relevant parameters for the expected credit losses, namely
probability of default, which incorporate forward-looking information. This incorporation of forward-looking
information is carried out in the relevant elements considered for the calculation of expected credit losses (ECL).
In particular, the PD point-in-time (PDpit) considered for the determination of the probability of performing exposures
at the reference date becoming defaulted exposures considers the expected values for a set of macroeconomic
variables, based on three scenarios (Central, Upside and Downside Scenario) prepared by the Bank's Economic Studies
area. These scenarios, which are used across the Bank for various purposes besides calculating impairment, take into
account existing projections by reference entities.
In December 2022 the Bank carried out an update of the macroeconomic scenarios and of the corresponded adjustment
of the parameters considered in the collective impairment model.
B2.Financial liabilities
B2.1.Classification, initial recognition and subsequent measurement
At initial recognition, financial liabilities are classified in one of the following categories:
–“Financial liabilities at amortised cost”;
–“Financial liabilities at fair value through profit or loss”.
B2.1.1.Financial liabilities at fair value through profit or loss
Classification
Financial liabilities classified under "Financial liabilities at fair value through profit or loss" include:
a)“Financial liabilities held for trading”
In this balance the issued liabilities are classified with the purpose of repurchasing in the near term, those that form
part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a
recent actual pattern of short-term profit-taking; or is a derivative (except for a derivative classified as hedging
instrument).
b)“Financial liabilities designated at fair value through profit or loss”
The Bank may irrevocably assign a financial liability at fair value through profit or loss at the time of its initial
recognition if at least one of the following conditions is met:
–the financial liability is managed, evaluated and reported internally at its fair value; or,
–the designation eliminates or significantly reduces the accounting mismatch of transactions.
Initial recognition and subsequent measurement
Considering that the transactions carried out by the Bank in the normal course of its business are made in market
conditions, financial liabilities at fair value through profit or loss are initially recognised at fair value with the costs or
income associated with the transactions recognised in profit or loss at the initial moment.

2022 REPORT & ACCOUNTS |

| 473
Subsequent changes in the fair value of these financial liabilities are recognised as follows:
–the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of
that liability shall be presented in other comprehensive income;
–the remaining amount of change in the fair value of the liability shall be presented in profit or loss.
The accrual of interest and the premium/discount (when applicable) is recognised in "Interest expense and similar
charges" based on the effective interest rate of each transaction.
B2.1.2.Financial guarantees
If they are not designated at fair value through profit or loss at the time of initial recognition, the financial guarantee
contracts are subsequently measured at the highest of the following amounts:
–the provision for losses determined according to the criteria described in note B1.5;
–the amount initially recognised deducted, when appropriate, from the accumulated amount of income recognised
according to IFRS 15 - Revenue from contracts with customers.
Financial guarantee contracts that are not designated at fair value through profit or loss are presented under
"Provisions".
B2.1.3.Financial liabilities at amortised cost
Classification
Financial liabilities that were not classified at fair value through profit or loss, or correspond to financial guarantee
contracts, are measured at amortised cost.
The category "Financial assets at amortised cost" includes resources from credit institutions and from customers, as
well as subordinated and non-subordinated debt securities.
Initial recognition and subsequent measurement
Financial liabilities at amortised cost are initially recognised at fair value plus transaction costs and are subsequently
measured at amortised cost. Interest on financial liabilities at amortised cost are recognised in "Interest expense and
similar charges", based on the effective interest rate method.
B2.2.Reclassification between categories of financial liabilities
Reclassifications of financial liabilities are not allowed.
B2.3.Derecognition of financial liabilities
The Bank derecognises financial liabilities when these are cancelled or extinct.
B3.Interest recognition
Income and expense related to interest from financial instruments measured at amortised cost are recognised in
"Interest and similar income" and "Interest expense and similar charges" (net interest income) through the effective
interest rate method. Interest related to financial assets at fair value through other comprehensive income is also
recognised in net interest income.
The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected
life of the financial instrument (or, when appropriate, for a shorter period), to the net carrying amount of the financial
asset or financial liability.

| 2022 REPORT & ACCOUNTS

474 |
For calculating the effective interest rate, the Bank estimates future cash flows considering all contractual terms of the
financial instrument (e.g., early payment options) but without considering future impairment losses. The calculation
includes all fees paid or received considered as included in the effective interest rate, transaction costs and all other
premiums or discounts directly related to the transaction, except for assets and liabilities at fair value through profit
and loss.
Interest income recognised in income associated with contracts classified in stage 1 or 2 are determined by applying the
effective interest rate for each contract on its gross book value. The gross balance of a contract is its amortised cost,
before deducting the respective impairment. For financial assets included in stage 3, interest is recognised in the
income statement based on its net book value (less impairment). The interest recognition is always made in a
prospective way, i.e., for financial assets entering stage 3, interest is recognised at the amortised cost (net of
impairment) in subsequent periods.
For purchased or originated credit-impaired assets (POCI), the effective interest rate reflects the expected credit losses
in determining the expected future cash flows receivable from the financial asset.
B4.Hedge accounting
As allowed by IFRS 9, the Bank opted to continue to apply the hedge accounting requirements in accordance with IAS
39.
The Bank designates derivatives and other financial instruments to hedge its exposure to interest rate and foreign
exchange risk, resulting from financing and investment activities. Derivatives that do not qualify for hedge accounting
are accounted for as trading instruments.
Derivative hedging instruments are stated at fair value and gains and losses on revaluation are recognised in accordance
with the hedge accounting model adopted by the Bank. A hedge relationship exists when:
–at the inception of the hedge there is formal documentation of the hedge;
–the hedge is expected to be highly effective;
–the effectiveness of the hedge can be reliably measured;
–the hedge is assessed in a continuous basis and highly effective throughout the reporting period; and,
–for hedges of a forecasted transaction, the transaction is highly probable and presents an exposure to variations in
cash flows that could ultimately affect profit or loss.
When a derivative financial instrument is used to hedge foreign exchange variations arising from monetary assets or
liabilities, no hedge accounting model is applied. Any gain or loss associated to the derivative is recognised through
profit and loss, as well as changes in currency risk of the monetary items.
B4.1.Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedge instruments are recognised
in profit and loss, together with changes in the fair value attributable to the hedged risk of the asset or liability or
group of assets and liabilities. If the hedge relationship no longer meets the criteria for hedge accounting, the
cumulative gains and losses due to variations of hedged risk linked to the hedge item recognised until the
discontinuance of the hedge accounting are amortised through profit and loss over the residual term of the hedged
item.
B4.2.Cash flow hedge
In a hedge relationship, the effective portion of changes in fair value of derivatives that are designated and qualify as
cash flow hedges are recognised in equity - cash flow hedge reserves in the effective part of the hedge relations. Any
gain or loss relating to the ineffective portion of the hedge is immediately recognised in profit and loss when occurred.
Amounts accumulated in equity are reclassified to profit and loss in the periods in which the hedged item will affect
profit or loss.

2022 REPORT & ACCOUNTS |

| 475
In case of hedging variability of cash flows, when the hedge instrument expires or is disposed or when the hedging
relationship no longer meets the criteria for hedge accounting, or when the hedge relation is revoked, the hedge
relationship is discontinued on a prospective basis. Therefore, the fair value changes of the derivative accumulated in
equity until the date of the discontinued hedge accounting can be:
–deferred over the residual period of the hedged instrument; or,
–recognised immediately in results, if the hedged instrument is extinguished.
In the case of a discontinued hedge of a forecast transaction, the change in fair value of the derivative recognised in
equity at that time remains in equity until the forecasted transaction is ultimately recognised in the income statement.
When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is
immediately transferred to profit and loss.
B4.3.Hedge effectiveness
For a hedge relationship to be classified as such according to IAS 39, effectiveness must be demonstrated. As such, the
Bank performs prospective tests at the beginning date of the initial hedge, if applicable, and retrospective tests in
order to demonstrate at each reporting period the effectiveness of the hedging relationships, demonstrating that the
variations in fair value of the hedging instrument are hedged by the fair value variations of the hedged item in the
portion assigned to the risk covered. Any ineffectiveness is recognised immediately in profit and loss when incurred.
B4.4.Hedge of a net investment in a foreign operation
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any exchange gain or
loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity. The gain or loss
relating to the ineffective portion is immediately recognised in profit and loss. Gains and losses accumulated in equity
related to the investment in a foreign operation and to the associated hedge operation are recognised in equity and
transferred to profit and loss, on the disposal of the foreign operation as part of the gain or loss from the disposal.
B5.Embedded Derivatives
An embedded derivative is a component of a hybrid agreement, which also includes a non-derived host instrument.
If the main instrument included in the hybrid contract is considered a financial asset, the classification and
measurement of the entire hybrid contract is carried out in accordance with the criteria described in note B1.1.3.
Derivatives embedded in contracts that are not considered financial assets are treated separately whenever the
economic risks and benefits of the derivative are not related to those of the main instrument, since the hybrid
instrument is not initially recognised at fair value through profit or loss. Embedded derivatives are recorded at fair
value with subsequent fair value changes recorded in profit or loss for the period and presented in the trading
derivatives portfolio.
C.Securitization operations
C1.Traditional securitizations
As at 31 December 2022, BCP has three residential mortgage credit securitization operations (Magellan Mortgages no.1,
no.3 and no.4), portfolios which were derecognised from the Bank’s individual balance sheet, as the residual portions
of the referred operations were sold to institutional investors and, consequently, their risks and benefits were
substantially transferred.
The three operations are traditional securitizations, where each mortgage loan portfolio was sold to a Portuguese Loan
Titularization Fund, which has financed this purchase through the sale of titularization units to a SPE with office in
Ireland. At the same time, this SPE issued and sold in capital markets a group of different portions of bonds.

| 2022 REPORT & ACCOUNTS

476 |
C2.Synthetic securitizations
Currently, the Bank has three synthetic securitization operations, with similar characteristics, with reference to credit
portfolios granted by the Bank mainly to Small and Medium Enterprises (SMEs).
Caravela SME no.3, which started on 28 June 2013, has a medium and long-term loan portfolio of current accounts and
authorized overdrafts.
Caravela SME no.4, initiated on 5 June 2014, has a reference portfolio of vehicle, real estate and equipment leasing.
Caravela SME no.5, initiated on 20 December 2022, is supported on a credit portfolio of medium and long term loans,
leasing contracts and commercial paper programmes.
In any of these operations, the Bank contracted a Credit Default Swap (CDS) from a Special Purpose Entity (SPE),
buying, this way, protection over the total referenced portfolio. As in all synthetic securitizations, under CDS, the risk
of the respective portfolios was divided in 3 tranches: senior, mezzanine and equity. In the case of both Caravela no. 3
and no. 4, the mezzanine and part of the equity (20%) were placed in the market through the issuance of Credit Linked
Notes (CLNs) by the above mentioned SPE which were subscribed by investors, while the Group retained the senior risk
and the remaining part of the equity (80%). In the case of Caravela SME no. 5, only the full amount of the mezzanine
was placed in the market, while the Group retained the risk of the full amount of the senior and equity tranches.
Note that in all of the above mentioned synthetic transactions, the product of the CLNs issue was invested by the SPE in
a deposit, which fully collateralizes the responsibilities in the presence of its creditors including BCP in accordance with
the CDS.
D.Equity instruments
A financial instrument is an equity instrument only if: i) the instrument includes no contractual obligation to deliver
cash or another financial asset to another entity or to exchange financial assets or financial liabilities with another
entity under conditions that are potentially unfavourable to the entity; and, ii) the instrument will or may be settled in
the issuer's own equity instruments, it is either a non-derivative that includes no contractual obligation for the issuer to
deliver a variable number of its own equity instruments or a derivative that will be settled only by the issuer
exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments.
An equity instrument, independently from its legal form, evidences a residual interest in the assets of an entity after
deducting all of its liabilities.
Transaction costs directly attributable to an equity instrument issuance are recognised in equity as a deduction to the
amount issued. Amounts paid or received related to sales or acquisitions of equity instruments are recognised in equity,
net of transaction costs.
Preference shares issued by the Bank are considered as an equity instrument when redemption of the shares is solely at
the discretion of the Bank and dividends are paid at the discretion of the Bank.
Income from equity instruments (dividends) are recognised when the obligation to pay is established and are deducted
to equity.
E.Securities borrowing and repurchase agreement transactions
E1.Securities borrowing
Securities lent under securities lending arrangements continue to be recognised in the balance sheet and are measured
in accordance with the applicable accounting policy. Cash collateral received in respect of securities lent is recognised
as a financial liability. Securities borrowed under securities borrowing agreements are not recognised. Cash collateral
placements in respect of securities borrowed are recognised under loans and advances to either banks or customers.
Income and expenses arising from the securities borrowing and lending business are recognised on an accrual basis over
the period of the transactions and are included in interest income or expense (net interest income).

2022 REPORT & ACCOUNTS |

| 477
E2.Repurchase agreements
The Bank performs acquisition/sale of securities under reselling/repurchase agreements of securities substantially
equivalent in a future date at a predetermined price ('repos'/'reverse repos'). The securities related to reselling
agreements in a future date are not recognised in the balance sheet. The amounts paid are recognised in loans and
advances to customers or loans and advances to credit institutions. The receivables are collateralised by the related
securities. Securities sold through repurchase agreements continue to be recognised in the balance sheet and are
revaluated in accordance with the applicable accounting policy. The amounts received from the proceeds of these
securities are considered as deposits from customers and deposits from credit institutions. The difference between the
acquisition/sale and reselling/repurchase conditions is recognised on an accrual basis over the period of the transaction
and is included in interest income or expenses.
F.Investments in subsidiaries and associates
Investments in subsidiaries and associates are accounted for in the Bank's financial statements at their historical cost
less any impairment losses.
Subsidiaries are entities controlled by the Bank (including investment funds and securitization vehicles). The Bank
controls an entity when it holds the power to designate the relevant activities of the entity, and when it is exposed or
has rights to variable returns from its involvement with the entity and is able to take possession of those results through
the power it holds over the relevant activities of that entity (de facto control).
Investments in associates
Associates are those entities in which the Bank has significant influence but not control over the financial and operating
policy decisions of the investee. It is assumed that the Bank has significant influence when it holds, directly or
indirectly, 20% or more of the voting rights of the investee. If the Bank holds, directly or indirectly less than 20% of the
voting rights of the investee, it is presumed that the Bank does not have significant influence, unless such influence can
be clearly demonstrated.
The existence of significant influence by the Bank is usually evidenced in one or more of the following ways:
–representation on the Board of Directors or equivalent governing body of the investee;
–participation in policy-making processes, including participation in decisions about dividends or other distributions;
–material transactions between the Bank and the investee;
–interchange of the management team; or
–provision of essential technical information.
Impairment
The recoverable amount of the investments in subsidiaries and associates is assessed annually, with reference to the
end of the year or whenever exists any impairment triggers. Impairment losses are calculated based on the difference
between the recoverable amount of the investments in subsidiaries and associates and their book value. Impairment
losses identified are charged against results and subsequently, if there is a reduction of the estimated impairment loss,
the charge is reversed, in a subsequent period. The recoverable amount is determined based on the higher between the
assets value in use and the fair value deducted of selling costs, calculated using valuation methodologies supported by
discounted cash flow techniques, considering market conditions, the time value of money and the business risks.
Merger of companies
The process of merging companies by incorporation corresponds to the incorporation of the assets and liabilities of a
company (merged) into another company (acquirer). In the event that the Bank is the acquirer company and the
merged company is controlled by the Bank, the merger is classified as a transaction between companies under common
control, and the Bank uses the denominated ‘predecessor approach’ as a criterion for recording in its individual
accounts, which consists of recording the assets and liabilities of the merged company at their book value as presented
in the Bank's consolidated accounts. This criterion provides for intra-group balances and historical transactions between
the two companies to be eliminated and the amounts regarding assets and liabilities to be adjusted accordingly. The
net difference between the amount recorded by the Bank and the amounts of the assets and liabilities incorporated is
recorded as a “Merger reserve”.

| 2022 REPORT & ACCOUNTS

478 |
G.Non-current assets held for sale and Discontinued or discontinuing operations
Non-current assets, groups of non-current assets held for sale (groups of assets together with related liabilities that
include at least a non-current asset) and discontinued operations are classified as held for sale when the intention is to
sell the referred assets and liabilities and when the referred assets or group of assets are available for immediate sale,
subject to the terms of sale usually applicable to these types of assets, and its sale is highly probable, in accordance
with IFRS 5. For the sale to be considered highly probable, the Bank must be committed to a plan to sell the asset (or
disposal group) and must have initiated an active program to locate a buyer and complete the plan. In addition, the
asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair
value. Furthermore, it should be expected that the sale qualifies for recognition as a completed sale within one year
from the date of classification, except as permitted by paragraph 9 of IFRS 5, and that the Bank remains committed to
the asset sales plan and the delay is caused by events or circumstances beyond its control.
The Bank also classifies as non-current assets held for sale those non-current assets or groups of assets acquired
exclusively with a view to its subsequent disposal, which are available for immediate sale and its sale is highly
probable. Immediately before classification as held for sale, the measurement of the non-current assets or all assets
and liabilities in a disposal group, is performed in accordance with the applicable IFRS. After their reclassification,
these assets or disposal groups are measured at the lower of their cost and fair value less costs to sell.
G1.Non-operating real estate (INAE)
The Bank also classifies as non-current assets held for sale the non-operating real estate (INAE), which include
properties acquired by the Bank as a result of the resolution of customer credit processes, as well as own properties
that are no longer used by the Bank's services.
At the time of acquisition, real estate classified as INAE is recognised at the lower of the value of the loans existing on
the date on which the recovery occurs, or the judicial decision is formalised, and the fair value of the property, net of
estimated costs for sale. Subsequent measurement of INAE is made at the lower of their book value and the
corresponding fair value, net of the estimated costs for their sale and are not subject to amortisation. Impairment
losses are recorded in the results of the period in which they arise.
The fair value is determined based on the market value, which is determined based on the expected sales price
obtained through periodic evaluations made by expert external evaluators accredited to the Comissão do Mercado de
Valores Mobiliários (CMVM).
Whenever the net fair value of the selling costs calculated for an INAE is less than the amount by which the same is
recognised in the Bank's balance sheet, an impairment loss is recorded in the amount of the decrease in value
ascertained. Impairment losses are recorded against income for the year.
If the net fair value of the selling costs of an INAE, after recognition of impairment, indicates a gain, the Bank may
reflect that gain up to the maximum of the impairment that has been recorded on that property.
H.Lease transactions (IFRS 16)
This standard establishes the requirements regarding the scope, classification/recognition and measurement of leases:
–from the lessor's perspective, leases will continue to be classified as finance leases or operating leases;
–from the lessee’s perspective, the standard defines a single model of accounting for lease contracts, which results
in the recognition of a right-of-use asset and a lease liability for all leases, except for those which the lease term
ends within 12 months or for those which the underlying asset is of low-value and, in these cases, the lessee may
opt for the exemption from recognition under IFRS 16, and shall recognise the lease payments associated with these
leases as an expense.
The Bank chose not to apply this standard to short-term lease contracts, i.e. contracts with a term shorter than or
equal to one year, and to lease contracts in which the underlying asset’s value is below Euros 5,000. Additionally, this
standard was not applied to leases of intangible assets.

2022 REPORT & ACCOUNTS |

| 479
Lease definition
The lease definition focuses on the control of the identified asset, establishing that a contract constitutes or contains a
lease if it carries the right to control the use of an identified asset, i.e., the right to obtain substantially all the
economic benefits of using it, and the right to choose how to use the identified asset over a period in exchange of a
payment.
Impacts from the lessee’s perspective
The Bank recognises for all leases, except for those with a term under 12 months or for leases of low-value assets:
–a right-of-use asset initially measured at cost must consider the Net Present Value (NPV) of the lease liability plus
the value of payments made (fixed and/or variable), deducted from any lease incentives received, penalties for
terminating the lease (if reasonably certain), as well as any cost estimates to be supported by the lessee with the
dismantling and removal of the underlying asset and/or with the recovery of its location. Subsequently, it will be
measured according to the cost model (subject to depreciations/amortisations and impairment tests);
–a lease liability initially recorded at the present value of the remaining lease payments (NPV), which includes:
–fixed payments deducted from any lease incentives receivable;
–variable lease payments that depend on a rate or an index, initially measured considering the rate or index as at
the commencement date;
–amounts expected to be paid by the lessee under residual values guarantees;
–the exercise price of a purchase option, if the lessee is reasonably certain to exercise that option;
–payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to end
the lease.
Since it is not possible to easily determine the implicit interest rate in the lease (paragraph 26 of IFRS 16), lease
payments are discounted according to the lessee’s incremental borrowing rate, which embodies the risk-free rate curve
(swap curve) plus the Bank’s spread of risk, applied over the weighted average term of each lease contract. For term
contracts, that date is considered as the end of lease date, while for contracts without term, or with renewable terms,
it is assessed using the date in which the contract is enforceable, as well as eventual economic penalties associated
with the lease contract. In the evaluation of enforceability, the particular clauses of the contracts are considered, as
well as the current law on Urban Leases.
Subsequently, lease payments are measured as follows:
–by increasing their carrying amount to reflect interest;
–by reducing their carrying amount to reflect lease payments;
–carrying amount shall be remeasured to reflect any leases’ revaluations or changes, as well as to reflect the review
of in-substance fixed payments and the review of the lease term.
The Bank remeasures the lease liability (and makes a corresponding adjustment to the right-of-use asset) whenever:
–the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case
the lease liability is remeasured by discounting the revised lease payments using the revised discount rate;
–the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed
residual value, in which cases the liability is remeasured by discounting the revised lease payments using the initial
discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a
revised discount rate is used);
–a lease contract is modified, and the lease modification is not accounted for as a separate lease, in which case the
lease liability is remeasured by discounting the revised lease payments using the revised discount rate.
The Bank did not make any adjustment during the periods presented.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If the
lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Bank expects to
exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset.
The depreciation starts at the commencement date of the lease.

| 2022 REPORT & ACCOUNTS

480 |
The implementation of this standard implies changes in the Bank’s financial statements, namely:
–in the income statement:
(i)recording in “Interest Income” the interest expenses related to lease liabilities;
(ii)recording in “Other administrative costs” the amounts related to short-term lease contracts and to lease
contracts of low-value assets; and,
(iii)recording in “Amortisations and depreciations” the depreciation expenses related to right-to-use assets.
–in the balance sheet:
(i)recording in “Other tangible assets” the recognition of right-to-use assets; and,
(ii)recording in “Other liabilities” the amount of recognised lease liabilities.
–in the statement of cash flows, the balance “Cash flows arising from operating activities – Payments (cash) to
suppliers and employees” includes amounts related to short-term lease contracts and to lease contracts of low-
value assets, and the balance “Cash flows arising from financing activities - Decrease in other sundry liabilities and
non-controlling interests” includes amounts related to payments of lease liabilities’ capital portions, as detailed in
the separate statement of cash flows.
Impact from the lessor’s perspective
In accordance with IFRS 16, paragraph 62, lessors shall classify leases as finance or operational leases.
A lease is classified as a finance lease if it transfers substantially all the risks and rewards inherent to ownership of an
underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards
inherent to ownership of an underlying asset.
Impact of the pandemic caused by COVID-19 virus
On 12 October 2020, the European Union published an amendment to IFRS 16, associated with income concessions
related to COVID-19. This amendment allows tenants, as a practical expedient, to have the possibility to choose not to
consider a rent concession that occurs as a direct consequence of the COVID-19 pandemic as a modification of the
lease. A lessee who uses this option must account for any concession that occurs at the rent level in the same way that
he would do it under IFRS 16 – Leases, if this change did not constitute a modification of the lease. This amendment
does not affect lessors.
I.Recognition of income from services and commissions
In accordance with IFRS 15, the Bank recognizes revenue associated with services and commissions when (or as) a
performance obligation is satisfied when transferring a service, based on the transaction price associated with this
performance obligation. In this context, the Bank takes the following steps to recognize revenue associated with
services and commissions:
–Recognition (satisfaction of the performance obligation): (i) identification of the contract associated with the
service provided and whether it should be covered by IFRS 15; (ii) identification of performance obligations
associated with each contract; (iii) definition of the criteria for the fulfillment of performance obligations, also
taking into account the contractual terms established with the counterparty. According to this definition, a service
is transferred when the customer obtains the benefits and control associated with the service provided. In this
context, the Bank also identifies whether performance obligations are met over time (“over time”) or at an exact
moment (“point in time”), with revenue being recognized accordingly.
–Measurement (price to be recognized associated with each performance obligation): (i) determine the transaction
price associated with the service provided, considering the contractual terms established with the counterparty
and its usual commercial practices. The transaction price is the amount of consideration to which the Bank expects
to be entitled in exchange for transferring promised services to the customer, excluding amounts collected on
behalf of third parties. The Bank includes in the transaction price part or all of the estimated amount of the
variable consideration associated with a performance obligation, only to the extent that it is highly probable that a
significant reversal in the amount of the accrued revenue recognized will not occur when the uncertainty
associated with that variable consideration is subsequently resolved; and (ii) allocate the transaction price to each
of the performance obligations identified under the contract established with the customer.
It should be noted that when services or commissions are an integral part of the effective interest rate of a financial
instrument, income resulting from services and commissions is recorded in net interest income (Note C.3).

2022 REPORT & ACCOUNTS |

| 481
J.Gains/(losses) on financial operations at fair value through profit or loss, Foreign exchange
gains/(losses), Hedge accounting gains/(losses), Gains/(losses) from derecognition of assets
and liabilities at amortised cost and Gains/(losses) from derecognition of financial assets at
fair value through other comprehensive income
These balances include gains and losses on financial assets and liabilities at fair value through profit and loss, i.e., fair
value changes and interest on trading derivatives and embedded derivatives, as well as the corresponding dividends
received. This balance also includes the gains and losses on sale of financial assets at fair value through other
comprehensive income and financial assets and financial liabilities at amortised cost. The changes in fair value of
hedging derivatives and hedged items, when fair value hedge is applicable, are also recognised in this balance, as well
as foreign exchange gains or losses.
K.Fiduciary activities
Assets held in the scope of fiduciary activities are not recognised in the Bank’s financial statements. Fees and
commissions arising from this activity are recognised in the income statement in the period in which they occur.
L.Other tangible assets
Other tangible assets are stated at acquisition cost less accumulated depreciation and impairment losses. Subsequent
costs are recognised as a separate asset only when it is probable that future economic benefits will result for the Bank.
All other repairs and maintenance expenses are charged to the income statement during the financial period in which
they are incurred, under the principle of accrual-based accounting.
Depreciation is calculated on a straight-line basis, over the following periods which correspond to their estimated
useful life:

| Number of years
Buildings | 50
Expenditure on freehold and leasehold buildings | 10
Equipment | 4 to 12
Other tangible assets | 3

Whenever there is an indication that a fixed tangible asset might be impaired, its recoverable amount is estimated and
an impairment loss shall be recognised if the net value of the asset exceeds its recoverable amount. The recoverable
amount is determined as the highest between the fair value less costs to sell and its value in use calculated based on
the present value of future cash flows estimated to be obtained from the continued use of the asset and its sale at the
end of the useful life. The impairment losses of the fixed tangible assets are recognised in the income statement of the
period.
M.Investment properties
Real estate properties owned by the Bank are recognised as ‘Investment properties’, considering that the main
objective of these buildings is their capital appreciation on a long-term basis and not their sale in a short-term period,
nor their maintenance for own use.
These investments are initially recognised at their acquisition cost, including transaction costs, and subsequently
revaluated at their fair value. The fair value of investment properties should reflect the market conditions at the
balance sheet date. Changes in fair value are recognised in the income statement, as "Other operating income/
(losses)" (note 6).
The experts responsible for the valuation of the assets are properly certified for that purpose, being registered in
CMVM.
N.Intangible assets
N1.Research and development expenditure
The Bank does not capitalise any research and development costs. All expenses are recognised as costs in the period in
which they occur.

| 2022 REPORT & ACCOUNTS

482 |
N2.Software
The Bank recognises as intangible assets the costs associated to software acquired from external entities, and
depreciates them on a straight-line basis by an estimated lifetime of 6 years. The Bank does not capitalise internal
costs arising from software development.
O.Cash and cash equivalents
For the purposes of the cash flow statement, the item “Cash and cash equivalents” comprises balances with less than
three months maturity from the balance sheet date, where the items "Cash and deposits at Central Banks" and "Loans
and advances to credit institutions" are included.
P.Offsetting
Financial assets and liabilities are offset and recognised at their net book value when: i) the Bank has a legal right to
offset the amounts recognised and transactions can be settled at their net value; and, ii) the Bank intends to settle on
a net basis or realize the asset and settle the liability simultaneously. Considering the current operations of the Bank,
no compensation of material amount is made. In case of reclassification of comparative amounts, the provisions of IAS
1.41 are disclosed: i) the nature of the reclassification; ii) the amount of each item (or class of items) reclassified; and,
iii) the reason for the reclassification.
Q.Foreign currency transactions
Transactions in foreign currencies are converted into the respective functional currency of the operation at the foreign
exchange rate on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
converted into the respective functional currency of the operation at the foreign exchange rate on the reporting date.
Foreign exchange differences arising from conversion are recognised in the income statement. Non-monetary assets and
liabilities denominated in foreign currencies, which are stated at historical cost, are converted into the respective
functional currency of the operation at the foreign exchange rate on the date of the transaction. Non-monetary assets
and liabilities denominated in foreign currencies that are stated at fair value are converted into the respective
functional currency of the operation at the foreign exchange rate on the date that the fair value was determined
against profit and loss, except for financial assets at fair value through other comprehensive income, for which the
difference is recognised against equity.
R.Employee benefits
R1.Defined benefit plans
The Bank has the responsibility to pay its employees' retirement pensions, invalidity pensions and survivor's pensions for
their death, in accordance with the terms of the two collective labour agreements approved. These benefits are
provided for in the pension plans ‘Plano ACT’ and ‘Plano ACTQ’ of the Banco Comercial Português Group Pension Fund.
Following the publication of Decree-Law no. 54/2009, of 2 March, banking entities are obligatorily enrolling new
employees in the General Social Security System (RGSS). These employees have the RGSS as their basic retirement
scheme, and do not have any benefits under the ACT (base plan). Under the scope of its management and human
resources, the Bank had already adopted as a rule the inclusion of new employees in the RGSS since July 2005.
However, until the transposition into the ACT of the alterations resulting from the referred Decree-Law no. 54/2009, all
employees were covered by the provisions of the social security chapter of the ACT, and for employees who were
already registered with the RGSS, the ACT benefit worked as a complement to the RGSS. As of 1 July 2009, in
accordance with the ACT, all new employees only have the RGSS as their basic social security scheme.
Until 2011, in addition to the benefits provided for in the two plans above-mentioned, the Bank had assumed the
responsibility, if certain conditions of profitability were verified in each year, of assigning retirement supplements to
the Bank's employees hired up to 21 September 2006 (Complementary Plan). The Bank, at the end of 2012, determined
the extinction (cut) of the old-age benefit of the Complementary Plan. On 14 December 2012, Instituto de Seguros de
Portugal (ISP) formally approved this change to the Bank's benefit plan, effective from 1 January 2012. The plan was
cut, and employees were given individual acquired rights. On that date, the Bank also proceeded to the settlement of
the respective liability.
From 1 January 2011, Bank employees were integrated in the General Social Security Scheme which now covers their
maternity, paternity, adoption and pension benefits. However, the banks remain liable for benefits that concern
illness, disability and life insurance (Decree-Law no. 1-A/2011, of 3 January).

2022 REPORT & ACCOUNTS |

| 483
The contributory rate is 26.6% divided between 23.6% supported by the employer and 3% supported by the employee,
replacing the Banking Social Healthcare System which was extinguished by the decree law referred above. As a
consequence of this amendment the capability to receive pensions by the actual employees are covered by the General
Social Security Scheme regime, considering the service period between 1 January 2011 and the retirement age. The
banks support the remaining difference for the total pension assured in the Collective Labour Agreement (ACT).
This integration has led to a decrease in the present value of the total benefits reported to the retirement age to be
borne by the Pension Fund, and this effect is to be recorded in accordance with the Projected Unit Credit during the
average lifetime of the pension until the normal retirement age is reached. The calculation of the liability for pensions
carried out periodically by the actuary considers this effect and is calculated considering the actuarial assumptions in
force, ensuring that the liabilities calculated with reference to 31 December 2010, not considering the effect of the
integration of bank employees into the General Social Security Scheme are fully covered and deducted from the amount
of the effect recognised until the date. The component of this effect for the year is recognised under the heading
"Current service costs".
Following the approval by the Government of the Decree-Law no. 127/2011, which was published on 31 December, an
agreement was established between the Government, the Portuguese Banking Association and the Banking Labour
Unions in order to transfer, to the Social Security, the liabilities related to pensions currently being paid to pensioners
and retirees, as at 31 December 2011.
This agreement established that the responsibilities to be transferred related to the pensions in payment as at 31
December 2011 at fixed amounts (discount rate 0%) in the component established in the IRCT - Instrument of Collective
Regulation of Work of the retirees and pensioners. The responsibilities related to the increase in pensions as well as any
other complements namely, contributions to the Health System (SAMS), death benefit and death before retirement
benefit continued to be under the responsibility of the Financial Institutions.
At the end of December 2016, a revision of the ACT was reached between the BCP Group and four unions from the two
union federations of the unions that represent the Group's employees, which introduced changes in the Social Security
clause and consequently in the pension plan financed by the BCP Group Pension Fund. The new ACT was published by
the Ministry of Labour in the Bulletin of Labour and Employment on 15 February 2017 and the effects were recorded in
the financial statements of 31 December 2016, for employees associated with these four unions.
The negotiation with Sindicato dos Bancários do Norte (SBN), which was also involved in the negotiations of the new
ACT, was concluded in April 2017 with the publication of the Bulletin of Labour and Employment, with the effects of
this new ACT recorded in the financial statements as at 31 December 2017, for employees associates of SBN.
The most relevant changes in the ACT were the change in the retirement age (presumed disability) from 65 years to 66
years and two months in 2016 and the subsequent update of an additional month in each year, which cannot, in any
case, be higher than the one in force at any moment in the General Regime of Social Security, the change in the
formula for determining the employer's contribution to SAMS and, lastly, the introduction of a new benefit called the
End of Career Premium, which replaces the Seniority Premium.
These changes were framed by the Bank as a change to the pension plan under the terms of IAS 19, as such had an
impact on the present value of the liabilities with services rendered and were recognised in the income statement for
the year under "Staff costs".
In 2017, after the authorization of the Autoridade de Supervisão de Seguros e Fundos de Pensões (ASF - Portuguese
Insurance and Pension Funds Supervision Authority), the BCP Group's pension fund agreement was amended. The main
purpose of the process was to incorporate into the pension fund the changes introduced in the Group's ACT in terms of
retirement benefits, as well as to transfer to the pension fund the responsibilities that were directly chargeable to the
company (extra-fund liabilities). The pension fund has a part exclusively for the financing of these liabilities which, in
the scope of the fund, is called Additional Complement. The End of Career Premium also became the responsibility of
the pension fund under the basic pension plan.
The Bank’s net obligation in respect of pension plans (defined benefit pensions plan) is calculated on a half year basis
at 31 December and 30 June of each year, and whenever there are significant market fluctuations or significant specific
events, such as changes in the plan, curtailments or settlements since the last estimation. The responsibilities with past
service are calculated using the Projected Unit Credit method and actuarial assumptions considered adequate.
Pension liabilities are calculated by the responsible actuary, who is certified by the ASF.

| 2022 REPORT & ACCOUNTS

484 |
The Bank’s net obligation in respect of defined benefit pension plans and other benefits is calculated separately for
each plan by estimating the amount of future benefit that employees have earned in return for their service in the
current and prior periods. The benefit is discounted in order to determine its present value, using a discount rate
determined by reference to interest rates of high quality corporate bonds that have maturity dates approximating the
terms of the Bank’s obligations. The net obligations are determined after the deduction of the fair value of the Pension
Plan's assets.
The income/cost of interest with the pension plan is calculated by the Bank, multiplying the net asset/liability with
retirement pension (liabilities less the fair value of the plan's assets) by the discount rate used in the determination of
the retirement pension liabilities. On this basis, the income/cost net of interest includes the interest costs associated
with retirement pension liabilities and the expected return of the plan's assets, both measured based on the discount
rate used to calculate the liabilities.
Gains and losses from the re-measurement, namely (i) actuarial gains and losses resulting from differences between
actuarial assumptions used and the amounts actually observed (experienced gains and losses) and changes in actuarial
assumptions and (ii) gains and losses arising from the difference between the expected return of the plan's assets and
the amounts obtained, are recognised against equity under "Other comprehensive income".
The Bank recognises in its income statement a net total amount that comprises (i) the current service cost, (ii) the
income/cost net of interest with the pension plan, (iii) the effect of early retirement, (iv) past service costs and, (v)
the effects of any settlement or curtailment occurred during the period. The net income/cost with the pension plan is
recognised as interest and similar income or interest expense and similar costs depending on their nature. The costs of
early retirements correspond to the increase in liabilities due to the employee's retirement before reaching the age of
retirement.
Employee benefits, other than pension plans, namely post-retirement health care benefits and benefits for the spouse
and descendants for death before retirement are also included in the benefit plan calculation.
The contributions to the funds are made annually by each company of the Group, according to a specific contribution
plan that ensures the solvency of the fund. In the end of each year, according to Bank of Portugal Notice no. 12/2001,
the minimum level required for the responsibilities funding must be 100% regarding pension payments and 95%
regarding past services of active employees.
R2.Revision of the salary tables for employees in service and pensions in payment
In 2022, negotiations continued with all the unions subscribing to the Group's Collective Labour Agreements, for the
conclusion of the full review of the respective clauses, negotiations which are still ongoing.
At the same time, negotiations took place with all the unions subscribed to the Group's Collective Labour Agreements
for the revision of the Salary Tables and other clauses of pecuniary expression relative to the years of 2021 and 2022,
having been agreed on 20 June and 1 July with all the unions subscribed to the Group's Collective Labour Agreements,
the update of the Salary Tables and the Bank's Contributions to SAMS in 2021 by 0.50%, and the increase of 0.50% of
other clauses of pecuniary expression, such as lunch subsidy, diuturnities, among others. The agreed updates took
effect on 1 January 2021, except for compensation for subsistence and travel allowances, which were updated after the
agreed updates were operational.
Regarding the revision of the Salary Tables and other clauses of pecuniary expression for 2022, it was agreed on 20 June
with the unions Mais Sindicato do Sector Financeiro, SBC – Sindicato Bancários do Centro and SBN - Sindicato dos
Trabalhadores do Sector Financeiro de Portugal, the update of Salary Tables by 1.10% up to and including level 13, and
0.70% for level 14 and beyond. An increase of 1.10% was agreed for the Bank's contributions to SAMS and other
pecuniary expression clauses, and an increase of 7.14% was agreed for the lunch subsidy, whose daily value was
increased to Euros 10.50. The agreed updates took effect on 1 January 2022, except for compensation for subsistence
and travel allowances, which were updated after the agreed updates were operational.
Regarding SNQTB – Sindicato Nacional dos Quadros e Técnicos Bancários and SIB – Sindicato Independente da Banca, an
agreement has not yet been reached on the proposal presented by the Group on 22 June, the content of which
corresponds to what was agreed with the other unions, hence the negotiations are still ongoing.

2022 REPORT & ACCOUNTS |

| 485
R3.Defined contribution plan
For the defined contribution plans, the responsibilities related to the benefits attributed to the Bank's employees are
recognised as expenses when incurred.
As at 31 December 2022, the Bank has two defined contribution plans. One plan covers employees who were hired
before 1 July 2009. For this plan, called non-contributory, Bank's contributions will be made annually and equal to 1% of
the annual remuneration paid to employees in the previous year. Contributions shall only be made if the following
requirements are met: (i) the Bank's ROE equals or exceeds the rate of government bonds of 10 years plus 5 percentage
points, and (ii) distributable profits or reserves exist in the accounts of Banco Comercial Português.
The other plan covers employees who have been hired after 1 July 2009. For this plan, designated contributory,
monthly contributions will be made equal to 1.5% of the monthly remuneration received by employees in the current
month, either by themselves or by the Bank and employees. This contribution has a mandatory character and is defined
in the Collective Labour Agreement of the BCP Group and does not have a performance criterion.
R4.Variable remuneration paid to employees
The remuneration policy for employees includes an annual variable remuneration system for employees not covered by
commercial incentive systems, based on the performance assessment of each employee, in accordance with
quantitative and qualitative criteria, that is carried out annually. As a result of this assessment and of the annual fixed
remuneration of reference for the role performed, and provided that the Bank's minimum level of performance, as
measured by a set of quantitative indicators, is met, the amount of the variable remuneration to be attributed to each
employee is determined.
The Executive Committee is responsible, under the terms defined in the remuneration policy, for setting the respective
allocation criteria for each employee, whenever it is attributed. The variable remuneration attributed to employees is
recorded against the income statement in the period to which it relates.
R5.Share-based compensation plan
As at 31 December 2022, a variable compensation plan with BCP shares is in force for the members of the Executive
Committee and for the employees considered Key Function Holders (includes Key Management Members), resulting from
the Remuneration Policies for the members of the management and supervisory bodies and for the Employees, both
approved for the financial year of 2022 and following years, with the changes that may be approved in each financial
year, namely by the General Shareholders’ Meeting regarding the Remuneration Policy for the members of the
management and supervisory bodies, and by the Board of Directors regarding the Remuneration Policy for Employees.
Key Function Holders include Key Management Members, which are the first line directors who report directly to the
Board of Directors and the remaining employees whose professional activities have a significant impact on the Bank's
risk profile.
As defined in the Remuneration Policy for the members of the management and supervisory bodies, an annual variable
remuneration system is foreseen, for which an assessment of the performance of each member of the Executive
Committee is carried out on an annual basis based on quantitative and qualitative criteria. According to this assessment
and the annual fixed remuneration, and provided that the Bank's minimum level of performance as measured by a set
of quantitative indicators is met, the amount of the variable remuneration to be attributed to each member of the
Executive Committee is decided by the Remuneration and Welfare Board. The payment of the amount of the variable
remuneration attributed is subject to a deferral period of 5 years for 50% of its value, being 50% of its value paid in the
year following the financial year in question. The amounts related to the non-deferred and deferred portion are paid
50% in cash and 50% in BCP shares. The number of BCP shares attributed results from their valuation at a price defined
in accordance with the approved Remuneration Policy.

| 2022 REPORT & ACCOUNTS

486 |
The Remuneration Policy for Employees foresees an annual variable remuneration system for Employees not covered by
Commercial Incentives Systems, based on the performance assessment of each employee, in accordance with
quantitative and qualitative criteria, that is carried out annually. As a result of this assessment and the fixed reference
remuneration for the function performed, and provided that the Bank's minimum level of performance in a set of
quantitative indicators is met, the value of the variable remuneration to be attributed to each Employee is decided by
the Executive Committee. For Employees considered as Key Function Holders, the payment of the amount of the
variable remuneration to be attributed to each Employee is decided by the Nominations and Remunerations Committee,
and its payment subject to a deferral period of 5 years for 40% of its value, with 60% of its value paid in the year
following the financial year in question. The amounts related to the non-deferred and deferred portion are paid 50% in
cash and 50% in BCP shares. The number of BCP shares attributed and to be attributed results from their valuation at a
price defined in accordance with the approved Remuneration Policy.
Employees considered as Key Function Holders are not covered by Commercial Incentives Systems.
For the remaining Employees not covered by Commercial Incentive Systems, the payment of the variable remuneration
amount awarded is fully paid in cash in the following year to which it relates.
As foreseen in the approved Remuneration Policy and in the applicable legislation, the amounts of variable
remuneration attributed to the members of the Executive Committee and to the Employees considered as Key Function
Holders are subject to reduction and reversal mechanisms, to be applied in case of verification of extremely significant
events, duly identified, in which the people covered have had a direct participation.
For the members of the Executive Committee, a long-term variable remuneration system is also foreseen, through
which these members may receive variable remuneration fully paid in BCP shares after the end of the assessment
period, from 1 January 2022 until 31 December 2025, provided that a certain level of performance is achieved in a set
of long-term objectives. The amount of the long-term variable remuneration attributed is subject to a deferral period
of 5 years for 50% of its value, being 50% of its value paid in the year following the assessment period to which it
relates. The number of BCP shares attributed results from their valuation at a price defined in accordance with the
approved Remuneration Policy.
All the shares attributed to the members of the Executive Committee and to the Key Function Holders, within the scope
of the payment of variable remuneration, including long-term, are subject to a retention period of 1 year after their
payment.
The total variable remuneration to be attributed, each year, to each member of the Executive Committee and to each
Employee considered as Key Function Holders, regarding the proportion between its amount and the annual fixed
remuneration, is limited to the limits provided in the respective Remuneration Policy.
S.Income taxes
The Bank is subject, in individual terms, to the regime established by the Corporate Income Tax Code (CIRC), the
Special Regime applicable to Deferred Tax Assets approved by Law no. 61/2014 of 26 August, to which it adhered, and
individual legislation. Additionally, deferred taxes relating to tax losses and to temporary differences between the
accounting net income and the net income accepted by the Tax Authorities for Income Taxes calculation are accounted
for, whenever there is a reasonable probability that these taxes will be paid or recovered in the future.
Income tax registered in net income for the year comprises current and deferred tax effects. Income tax is recognised
in the income statement, except when related to items recognised directly in equity, which implies its recognition in
equity. Deferred taxes arising from the revaluation of financial assets at fair value through other comprehensive income
and cash flow hedging derivatives are recognised in shareholders’ equity and are recognised after in the income
statement at the moment the profit and loss that originated the deferred taxes are recognised.
Current tax is the value that determines the taxable income for the year, using tax rates enacted or substantively
enacted by authorities at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred taxes are calculated in accordance with the liability method based on the balance sheet, considering
temporary differences, between the carrying amounts of assets and liabilities and the amounts used for taxation
purposes using the tax rates approved or substantially approved at balance sheet date and that is expected to be
applied when the temporary difference is reversed.

2022 REPORT & ACCOUNTS |

| 487
Deferred tax liabilities are recognised for all taxable temporary differences except for non-deductible goodwill for tax
purposes, differences arising from initial recognition of assets and liabilities that affect neither accounting nor taxable
profit and differences relating to investments in subsidiaries to the extent that probably they will not reverse in the
foreseeable future.
The item “Deferred tax assets” includes amounts associated with credit impairments not accepted for tax purposes
whose credits have been written-off, according to the expectation that the use of such impairments will be deductible
for the purposes of determining taxable income for the tax periods in which the legal conditions required for their tax
deductibility are met.
Deferred tax assets are recognised when it is probable that there will be future taxable profits that absorb the
deductible temporary differences for tax purposes (including reportable tax losses).
The Bank, as established in IAS 12, paragraph 74, compensates the deferred tax assets and liabilities if, and only if: (i)
it has a legally enforceable right to offset current tax assets and current tax liabilities; and, (ii) the deferred tax assets
and the deferred tax liabilities relate to income taxes released by the same Tax Authority on either the same taxable
entity.
The Bank complies with the guidelines of IFRIC 23 – Uncertainty over Income Tax Treatments on the determination of
taxable profit, tax bases, tax losses to be reported, tax credits to be used and tax rates in scenarios of uncertainty
regarding the income tax treatment, not having occurred any material impact on the Bank’s financial statements
resulting from its application.
In 2016, the Bank adhered to the Special Tax Regime for Groups of Companies (RETGS) for the purposes of IRC taxation,
with BCP being the dominant entity. In the financial years of 2022 and 2021, RETGS application was maintained. In
2021, Millennium bcp Participações Sociais – Sociedade Unipessoal, Lda. and BCP África, SGPS, Lda., were included in
the group of companies covered by this regime, being now covered by the general IRC regime. The group's taxable
profit is calculated by the algebraic sum of the individual taxable profits and tax losses of the companies that comprise
it.
T.Segmental reporting
The Bank adopted IFRS 8 – Operating Segments for the purpose of disclosing financial information by operating and
geographic segments. A business segment is a Bank's component: (i) which develops business activities that can obtain
revenues or expenses; (ii) whose operating results are regularly reviewed by the management with the aim of taking
decisions about allocating resources to the segment and assess its performance; and, (iii) for which separate financial
information is available.
Since the separate financial statements are presented with the Group's report, in accordance with paragraph 4 of IFRS
8, the Bank is exempt of presenting information on an individual basis regarding segmental reporting.
U.Provisions, Contingent liabilities and Contingent assets
U1.Provisions
Provisions are recognised when (i) the Bank has a present obligation (legal or resulting from past practices or published
policies that imply the recognition of certain responsibilities); (ii) it is probable that a payment will be required to
settle; and, (iii) a reliable estimation can be made of the amount of the obligation.
Additionally, when fundamental reorganizations occur that have a material effect on the nature and focus of the
company's operations, and the criteria for recognition of provisions referred to above are met, provisions are
recognized for restructuring costs.
The measurement of provisions considers the principles set in IAS 37 regarding the best estimate of the expected cost,
the most likely result of current actions and considering the risks and uncertainties inherent to the process result. On
the cases that the discount effect is material, provision corresponds to the actual value of the expected future
payments, discounted at a rate that considers the associated risk of the obligation.
Provisions are reviewed at each balance sheet date and adjusted to reflect the best estimate, being reverted through
profit and loss in the proportion of the payments that are not probable.
Provisions are derecognised through their use in the obligations for which they were initially created, or in the case
that these obligations cease to exist.

| 2022 REPORT & ACCOUNTS

488 |
U2.Contingent assets
Contingent assets are not recognised in the financial statements and are disclosed when a future economic inflow of
resources is probable.
U3.Contingent liabilities
Contingent liabilities are not recognised in the financial statements, being framed under IAS 37 whenever the possibility
of an outflow of resources regarding economic benefits is not remote. The Bank registers a contingent liability when:
i)it is a possible obligation that arises from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events that are not wholly within the control of the
Bank; or,
ii)it is a present obligation that arises from past events but is not recognised because:
a)it is not probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; or,
b)the amount of the obligation cannot be measured with sufficient reliability.
The contingent liabilities identified are subject to disclosure, unless the possibility of an outflow of resources
incorporating economic benefits is remote.
V.Earnings per share
Basic earnings per share are calculated by dividing net income attributable to shareholders of the Bank by the weighted
average number of ordinary shares outstanding, excluding the average number of ordinary shares purchased by the
Bank and held as treasury shares.
For the diluted earnings per share, the weighted average number of ordinary shares outstanding is adjusted to consider
conversion of all dilutive potential ordinary shares. Potential or contingent share issues are treated as dilutive when
their conversion to shares would decrease net earnings per share. If the earnings per share are changed as a result of an
issue with premium or discount or other event that changed the potential number of ordinary shares or as a result of
changes in the accounting policies, the earnings per share for all presented periods should be adjusted retrospectively.
W.Insurance or reinsurance intermediation services
Banco Comercial Português is an entity authorized by Autoridade de Supervisão de Seguros e Fundos de Pensões (ASF)
for the practice of insurance intermediation in the category of Linked Insurance Broker, in accordance with Article 8,
paragraph a), subparagraph i) of Decree-Law no. 144/2006, of 31 July, carrying out insurance intermediation activities
in life and non-life segments.
Within the scope of insurance intermediation services, this bank performs the sale of insurance contracts. As
compensation for insurance intermediation services, it receives commissions for arranging insurance contracts and
investment contracts, which are defined in agreements/protocols established with the Insurance Companies.
Commissions received for insurance intermediation are recognised in accordance with the accrual accounting principle,
so the commissions whose receipt occurs at a different time from the period to which they refer are recognised as an
amount receivable under the item "Other assets". Commissions received for insurance mediation services are recognized
in accordance with the policy described in note I above.
X.Accounting estimates and judgments in applying accounting policies
IFRS set forth a range of accounting treatments that require the Board of Directors, under advice of the Executive
Committee, to apply judgments and to make estimations when deciding which treatment is the most appropriate.
These estimates were made considering the best information available at the date of preparation of the financial
statements, considering the context of uncertainty that results from the context in the current economic scope. The
most significant of these accounting estimates and judgments used when applying accounting principles are discussed in
this section in order to improve understanding of how they affect the Bank’s reported results and related disclosure.
Considering that in some cases there are several alternatives to the accounting treatment chosen by the Board of
Directors, under advice of the Executive Committee, the Bank’s reported results would differ if a different treatment
was chosen. The Executive Committee believes that the choices made are appropriate and that the financial
statements present the Bank’s financial position and results fairly in all material relevant aspects.

2022 REPORT & ACCOUNTS |

| 489
The alternative outcomes discussed below are presented solely to assist the reader in understanding the financial
statements and are not intended to suggest that other alternatives or estimations would be more appropriate.
X1.Income taxes
Interpretations and estimations were required to determine the total amount of income taxes. There are many
transactions and calculations for which the tax determination is uncertain during the ordinary course of business.
Different interpretations and estimations could result in a different level of income taxes, current and deferred,
recognised in the year.
This aspect assumes greater relevance for the purposes of the analysis of the recoverability of deferred taxes, in which
the Bank considers projections of future taxable income based on a set of assumptions, including the estimate of
income before tax, adjustments to taxable income, evolution of tax legislation and its interpretation. Thus, the
recoverability of deferred tax assets depends on the implementation of the Bank's Board of Directors strategy, namely
the ability to generate the estimated taxable income, the evolution of tax law and its interpretation.
The regulatory decrees no. 5/2016, of 18 November, no. 11/2017, of 28 December, and no. 13/2018, of 28 December,
established the maximum limits for impairment losses and other value adjustments for specific credit risk deductible
for the purposes of calculating taxable income under IRC in 2016, 2017 and 2018, respectively. These regulatory
decrees establish that Bank of Portugal Notice no. 3/95 (Notice that was relevant for determining credit provisions in
the financial statements presented in NCA) must be considered for the purposes of determining the maximum limits of
impairment losses accepted for tax purposes in 2016, 2017 and 2018, respectively.
Law no. 98/2019, of 4 September, establishes the tax regime of credit impairment and of provisions for guarantees for
the tax periods beginning on or after 1 January 2019, predicting the approximation between accounting and tax rules
for purposes of deductibility of expenses related to the increase of credit impairments. The rules in force until 2018
could continue to be applied until the end of the 2023 financial year, unless the option to apply the new regime was
exercised in advance.
In calculating the taxable income for the year 2021, the maintenance of the tax rules in force until 2018 was
considered. In 2022, the Bank exercised the option to apply the new regime, under the terms of which the impairment
losses for credit risk relating to exposures analyzed on an individual basis or on a collective basis, recognized in
accordance with applicable accounting standards and regulations, maintaining the rules in force until 2018 for the
balance of impairment losses and other value adjustments for specific credit risk recorded up to 31 December 2021.
Following the amendments provided for in Law No. 24-D/2022, of 30 December, within the scope of the State Budget
for 2023, the time limit applicable to the carrying forward of tax losses in Portugal was eliminated. This amendment
applies to tax losses calculated in tax periods beginning on or after 1 January 2023, as well as to tax losses calculated in
tax periods prior to 1 January 2023 and whose deduction period is still in progress on that date. Thus, tax losses
calculated in 2014 and subsequent years may be deducted from future taxable income. The deduction limit for tax
losses increased from 70% to 65%, being increased by ten percentage points when the difference results from the
deduction of tax losses calculated in the 2020 and 2021 tax periods, under the terms of the special regime provided for
in Law n. 27-A/2020, of July 24th.
In the projections of future taxable income, namely for purposes of the analysis of the recoverability of deferred taxes
assets carried out with reference to 31 December 2022, the approximation between the accounting and tax rules
provided for in the aforementioned Law n.º 98/2019 was considered, of 4 September, taking into account the option for
applying the new regime exercised in 2022, as well as the changes in terms of the elimination of the time limit on the
use of tax losses provided for in said Law no. 24-D/2022, of 30 December.

| 2022 REPORT & ACCOUNTS

490 |
The taxable income or tax loss determined by the Bank can be corrected by the Portuguese Tax Authority in the period
of four years, except if any deduction was made or if tax credit was used, in which the limitation period corresponds to
the same of exercising of that right. The Bank recorded provisions or deferred tax liabilities in the amount that finds
appropriate to face the tax amendments or the tax losses of which was object, as well as the contingencies regarding
exercises not yet revised by the Tax Authority.
X2.Non-current assets held for sale (real estate) valuation
The valuation of these assets, and consequently the impairment losses, is supported by evaluations carried out by
external experts, which incorporate several assumptions, namely the selling price per square meter, discount rate,
better use of the real estate and expectations regarding the development of real estate projects, as applicable, and
also considers the Bank's historical experience in the commercialization of real estate, its perspectives on the evolution
of the real estate market and the intentions of the management body regarding the commercialization of these assets.
The assumptions used in the valuations of these assets have an impact on their valuation and consequently on the
determination of impairment.
X3.Pension and other employees’ benefits
Determining pension liabilities requires the use of assumptions and estimations, including the use of actuarial
projections, estimated returns on investment, and other factors, such as discount rate, pensions and salary growth
rates, mortality tables, that could impact the cost and liability of the pension plan.
The discount rate used to update the responsibilities of the Bank's pension fund, regarding the defined benefit pension
plans of its employees and managers, was determined based on an analysis of an available set of information, which
includes, among others elements, market references for this indicator published by internationally recognized
specialized entities.
X4.Financial instruments – IFRS 9
X4.1.Classification and measurement
The classification and measurement of financial assets depends on the results of the SPPI test (analysis of the
characteristics of the contractual cash flows to determine if they correspond only to payments of principal and interest
on the outstanding capital) and the testing of the business model.
The Bank determines the business model at a level that reflects how financial asset groups are managed together to
achieve a specific business objective. This evaluation requires judgment, since the following aspects, among others,
must be considered: the way in which the performance of assets is evaluated; the risks that affect the performance of
the assets and the way these risks are managed; and how asset managers are rewarded.
The Bank monitors the financial assets measured at amortised cost and at fair value through other comprehensive
income that are derecognised prior to their maturity to understand the underlying reasons for their disposal and to
determine whether they are consistent with the purpose of the business model defined for these assets. This monitoring
is part of a process of continuous evaluation by the Bank of the business model of the financial assets that remain in the
portfolio, to determine if it is adequate and, if it is not, if there was a change in the business model and, consequently,
a prospective classification change of these financial assets.

2022 REPORT & ACCOUNTS |

| 491
X4.2.Impairment losses on financial assets at amortised cost and debt instruments at fair value through
other comprehensive income
The determination of impairment losses on financial instruments involves judgments and estimations regarding, among
others, the following:
Significant increase in credit risk:
Impairment losses correspond to the expected losses on a 12-month for the assets in Stage 1 and the expected losses
considering the probability of a default event occurring at some point up to the maturity date of the instrument
financial assets for assets in Stages 2 and 3. An asset is classified in Stage 2 whenever there is a significant increase in
its credit risk since its initial recognition. In assessing the existence of a significant increase in credit risk, the Bank
considers qualitative and quantitative information, reasonable and sustainable.
In order to comply with the Supervisors' guidelines, namely with regard to the identification and measurement of credit
risk in the context of uncertainty associated with the current geopolitical crisis, the rupture in distribution chains, the
increase in energy costs and inflationary pressures, the Bank proceeded to record additional impairments in relation to
the current models of collective impairment calculation (overlays).
The exercise carried out was based on an analysis of migrations from customers identified as having the highest risk for
Stage 2 and Stage 3, with the greatest impact on the corporate segment.
Definition of groups of assets with common credit risk characteristics:
When expected credit losses are measured on a collective basis, the financial instruments are grouped based on
common risk characteristics. The Bank monitors the adequacy of credit risk characteristics on a regular basis to assess
whether it maintains its similarity. This procedure is necessary to ensure that, in the event of a change in the credit
risk characteristics, the asset segmentation is reviewed. This review may result in the creation of new portfolios or in
transferring assets to existing portfolios that better reflect their credit risk characteristics.
Definition of the number and relative weight of prospective information for each type of product/market and
determination of relevant prospective information:
In estimating expected credit losses, the Bank uses reasonable and sustainable forecasting information that is based on
assumptions about the future evolution of different economic drivers and how each of the drivers impacts the
remaining drivers.
Probability of default:
The probability of default represents a determining factor in the measurement of expected credit losses and
corresponds to an estimation of the probability of default in a given period, which is calculated based on historical
data, assumptions and expectations about future conditions.
Loss given default:
It corresponds to a loss estimation in a default scenario. It is based on the difference between the contractual cash
flows and those that the Bank expects to receive, through the cash flows generated by the customers' business or credit
collaterals. The estimation of loss given default is based on, among other aspects, the different recovery scenarios,
historical information, the costs involved in the recovery process and the estimation of the valuation of collaterals
associated with credit operations.

| 2022 REPORT & ACCOUNTS

492 |
X4.3.Fair value of derivative financial instruments
Fair values are based on listed market prices if available, otherwise fair value is determined either by dealer price
quotations (either for that transaction or for similar instruments traded) or by pricing models, based on net present
value of estimated future cash flows which considers the market conditions for the underlying instruments, time value,
yield curve and volatility factors. These pricing models may require assumptions or judgments in estimating their fair
values. Consequently, the use of a different model or of different assumptions or judgments in applying a particular
model could result in different results from the ones reported.
Due to market stress conditions, the Bank needed to reallocate the risk limits, especially in the sensitivity limit of the
trading portfolio and to review the stress-test scenarios and their methodologies.
In the context of uncertainty associated with the current macroeconomic environment, the calculation of fair value
adjustments was revised considering liquidity discounts, the costs of closing positions (widening the buy and sell
spread), credit risk, spreads of financing and increased volatility.
X5.Impairment of investments in subsidiary and associated companies
The Bank assesses annually the recoverable amount of investments in subsidiary and associated companies, regardless
of the existence of any impairment triggers. Impairment losses are calculated based on the difference between the
recoverable amount of the investments in subsidiary and associated companies and their book value. Impairment losses
identified are recognised against profit and loss, being subsequently reversed by profit and loss if there is a reduction in
the estimated impairment loss in a subsequent period.
The recoverable amount is determined based on the highest between the value in use of the assets and the fair value
deducted of selling costs, calculated using valuation methodologies supported by discounted cash flow techniques,
considering market conditions, the time value of money and the business risks, which require the use of assumptions or
judgments in establishing fair value estimates.
The use of alternative methodologies and different assumptions and estimates could result in a different level of
impairment losses recognized, with the consequent impact on the Bank’s consolidated income statement.
Y.Subsequent events
The Bank analyses events occurred after the balance sheet date, i.e., favourable and/or unfavourable events that
occur between the balance sheet date and the date the financial statements were authorized for issue. In this context,
two types of events can be identified:
i)those that provide evidence of conditions that existed at the balance sheet date (events after the balance sheet
date that give rise to adjustments); and,
ii)those that are indicative of the conditions that arose after the balance sheet date (events after the balance sheet
date that do not give rise to adjustments).
Events occurred after the date of the financial statements that are not considered as adjustable events, if significant,
are disclosed in the notes to the financial statements.

2022 REPORT & ACCOUNTS |

| 493
2.Net interest income
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Interest and similar income |  |
Interest on loans and advances to credit institutions repayable on demand | 19,598 | (6,740)
Interest on financial assets at amortised cost |  |
Loans and advances to credit institutions | 9,633 | 2,275
Loans and advances to customers | 859,008 | 760,317
Debt instruments | 91,540 | 28,191
Interest on financial assets at fair value through profit or loss |  |
Financial assets held for trading | 1,718 | (353)
Financial assets not held for trading mandatorily at fair value through profit or loss | 1,641 | 2,511
Interest on financial assets at fair value through other comprehensive income | 47,361 | 34,475
Interest on hedging derivatives | 26,410 | 30,301
Interest on other assets | 7,125 | 4,258
| 1,064,034 | 855,235
Interest expense and similar charges |  |
Interest on financial liabilities at amortised cost |  |
Resources from credit institutions | 24,472 | 54,273
Resources from customers | (18,693) | (13,386)
Non subordinated debt securities issued | (39,561) | (31,455)
Subordinated debt | (44,582) | (34,953)
Interest on financial liabilities at fair value through profit or loss |  |
Financial liabilities held for trading |  |
Derivatives associated to financial instruments at fair value through profit or loss | (1,013) | 163
Financial liabilities at fair value through profit or loss |  |
Resources from customers | — | (1,542)
Non subordinated debt securities issued | (3,565) | (1,228)
Interest on hedging derivatives | (60,127) | (14,198)
Interest on leasing | (2,658) | (2,868)
Interest on other liabilities | (1,976) | (2,248)
| (147,703) | (47,442)
| 916,331 | 807,793

The balance Interest on deposits at Central Banks and on loans and advances to credit institutions repayable on demand
has accounted for a negative interest of Euros 6,572,000 (2021: Euros 6,737,000) associated with demand deposits with
the Bank of Portugal (do not include overnight operations).
The balance Interest on financial assets at amortised cost - Loans and advances to customers includes the amount of
Euros 40,659,000 (2021: Euros 32,972,000) related to commissions and other gains accounted for under the effective
interest method, as referred in the accounting policy described in note 1.B3. This balance also includes the amount of
Euros 38,379,000 (2021: Euros 34,955,000) related to interest income arising from customers classified in stage 3.

| 2022 REPORT & ACCOUNTS

494 |
The balance Interest expense and similar charges - Interest on financial liabilities at amortised cost - Resources from
credit institutions has recorded a negative cost of Euros 41,555,000 (2021: negative cost of Euros 81,266,000)
associated with the TLTRO III operation (described in note 29).
The balances Interest on non-subordinated debt securities issued and Interest on subordinated debt include the amount
of Euros 608,000 and Euros 970,000, respectively (2021: Euros 625,000 and Euros 823,000, respectively) related to
commissions and other costs accounted for under the effective interest method, as referred in the accounting policy
described in note 1.B3.
The balance Interest on leasing refers to the interest cost related to the leasing liabilities recognised under IFRS 16, as
referred in accounting policy described 1.H.
3.Dividends from equity instruments
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Dividends from financial assets through other comprehensive income | 9,370 | 231
Dividends from subsidiaries and associated companies | 148,995 | 18,080
| 158,365 | 18,311

The balances Dividends from financial assets through other comprehensive income include dividends in 2022 dividends
from shares of Octal Group Lda in the amount of Euros 7,950,000 and of Tiicc, Sarl in the amount of Euros 1,325,000.
This balance also includes income from investment fund units received during the year.
The balance Dividends from subsidiaries and associated companies includes, off which, as of 31 December 2022, the
amounts of Euros 132,251,000, Euros 10,353,000 and Euros 2,500,000 related to the distribution of dividends from
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., Millennium bcp Participações, S.G.P.S., Sociedade Unipessoal,
Lda. and Interfundos - Sociedade Gestora de Organismos de Investimento Coletivo, S.A. respectively. The balance
Dividends from subsidiaries and associated companies includes, as of 31 December 2021, the amounts of Euros
6,799,000, Euros 6,079,000 and Euros 3,200,000 related to the distribution of dividends from company Millennium bcp
Participações, S.G.P.S., Sociedade Unipessoal, Lda., Banque Privée BCP (Suisse) S.A. and Interfundos - Sociedade
Gestora de Organismos de Investimento Coletivo, S.A., respectively.
4.Net fees and commissions income
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Fees and commissions received |  |
From guarantees | 40,424 | 37,138
From commitments | 5,195 | 5,307
From banking services | 298,343 | 268,275
From bancassurance | 83,458 | 84,240
From management and intervention commissions | 23,597 | 22,782
From securities operations | 65,853 | 61,708
From management and maintenance of accounts | 140,284 | 120,488
From other commissions | 4,504 | 4,507
| 661,658 | 604,445
Fees and commissions paid |  |
From guarantees received | (9,132) | (3,405)
From banking services provided by third parties | (96,042) | (87,629)
From securities operations | (8,119) | (7,800)
From other commissions | (14,317) | (16,001)
| (127,610) | (114,835)
| 534,048 | 489,610

2022 REPORT & ACCOUNTS |

| 495
5.Net gains / (losses) on financial operations
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Net gains / (losses) from financial operations at fair value through profit or loss Net gains / ( losses) from financial assets held for trading | (154,627) | 198,607
Net gains / ( losses) from financial assets not held for trading mandatorily at fair value through profit or loss | (5,212) | (56,400)
Net gains / ( losses) from financial assets and liabilities designated at fair value through profit or loss | 170,259 | (192,056)
| 10,420 | (49,849)
Net gains / (losses) from foreign exchange | 43,430 | 30,890
Net gains / (losses) from hedge accounting | 970 | 4,644
Net gains / (losses) from derecognition of financial assets and liabilities at amortised cost | 18,414 | (3,593)
Net gains / (losses) from derecognition of financial assets at fair value through other comprehensive income | (45,411) | 65,889
| 27,823 | 47,981

The balances Net gains / (losses) from financial operations at fair value through profit or loss is comprised of:

| (Thousands of euros)
| 2022 | 2021
Net gains /( losses) from financial assets held for trading |  |
Gains |  |
Debt securities portfolio | 4,422 | 13,133
Equity instruments | 189 | 2
Derivative financial instruments | 196,734 | 250,850
Other operations | 1,963 | 1,498
| 203,308 | 265,483
Losses |  |
Debt securities portfolio | (9,834) | (11,381)
Equity instruments | (8,051) | (628)
Derivative financial instruments | (339,426) | (54,048)
Other operations | (624) | (819)
| (357,935) | (66,876)
| (154,627) | 198,607
Net gains /( losses) from financial assets not held for trading mandatorily at fair value through profit or loss |  |
Gains |  |
Debt securities portfolio | 47,686 | 4,682
Losses |  |
Debt securities portfolio | (52,898) | (61,082)
| (5,212) | (56,400)
|  | (continues)

| 2022 REPORT & ACCOUNTS

496 |

(continuation) | (Thousands of euros)
| 2022 | 2021
Net gains /( losses) from financial assets and liabilities designated at fair value through profit or loss |  |
Gains |  |
Resources from customers | 3,936 | 176
Debt securities issued |  |
Certificates and structured securities issued | 142,982 | —
Other debt securities issued | 25,993 | 3,697
| 172,911 | 3,873
Losses |  |
Debt securities issued |  |
Certificates and structured securities issued | — | (193,488)
Other debt securities issued | (2,652) | (2,441)
| (2,652) | (195,929)
| 170,259 | (192,056)
| 10,420 | (49,849)

In the balances Net gains /(losses) from financial assets and liabilities designated at fair value through profit or loss -
Gains/(Losses) - Certificates and structured securities issued are recorded the valuations and devaluations of
certificates issued by the Bank. These liabilities are covered by futures, which valuation and devaluation are recorded
in Net gains /( losses) from financial assets held for trading - Profit/(Losses) - Derivative financial instruments.
The balances Net gains / (losses) from foreign exchange, Net gains / (losses) from hedge accounting and Net gains /
(losses) from derecognition of financial assets, liabilities at amortised cost, are presented as follows:

| (Thousands of euros)
| 2022 | 2021
Net gains / (losses) from foreign exchange |  |
Gains | 57,312 | 46,791
Losses | (13,882) | (15,901)
| 43,430 | 30,890
Net gains / (losses) from hedge accounting |  |
Gains |  |
Hedging derivatives | 1,279,578 | 178,165
Hedged items | 199,895 | 10,452
| 1,479,473 | 188,617
Losses |  |
Hedging derivatives | (361,702) | (33,943)
Hedged items | (1,116,801) | (150,030)
| (1,478,503) | (183,973)
| 970 | 4,644
Net gains/(losses) from derecognition of financial assets and liabilities at amortised cost |  |
Gains |  |
Credit sales | 12,928 | 828
Debt securities portfolio | 10,466 | —
Debt securities issued | — | 4
Others | 647 | 163
| 24,041 | 995
Losses |  |
Credit sales | (4,637) | (4,235)
Others | (990) | (353)
| (5,627) | (4,588)
| 18,414 | (3,593)

2022 REPORT & ACCOUNTS |

| 497
The balance Net gains / (losses) from derecognition of financial assets at fair value through other comprehensive
income is comprised of:

| (Thousands of euros)
| 2022 | 2021
Net gains / (losses) from derecognition of financial assets at fair value through other comprehensive income |  |
Gains |  |
Debt securities portfolio | 39,620 | 67,824
Losses |  |
Debt securities portfolio | (85,031) | (1,935)
| (45,411) | 65,889

The balance Net gains / (losses) from derecognition of financial assets at fair value through other comprehensive
income - Gains - Debt securities portfolio includes the amount of Euros 479,000 (2021: Euros 38,895,000) related to
gains resulting from the sale of Portuguese Treasury bonds.
The balance Net gains / (losses) from hedge accounting includes a net gain of Euros 156,969,000 (2021: net gain of
Euros 4,748,000) as a result of the sale of financial assets at fair value through other comprehensive income subject to
hedge accounting, which are offset in the balance Net gains / (losses) from derecognition of financial assets at fair
value through other comprehensive income.
6.Other operating income / (losses)
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Operating income |  |
Income from services | 25,239 | 27,809
Cheques and others | 7,702 | 7,495
Gains on leasing operations | 3,266 | 5,764
Rents | 1,187 | 1,234
Other operating income | 18,276 | 14,470
| 55,670 | 56,772
Operating costs |  |
Taxes | (11,209) | (9,055)
Donations and contributions | (3,638) | (4,054)
Contribution to the banking sector | (43,186) | (39,017)
Contribution to the Resolution Fund | (18,540) | (16,835)
Contribution to the Single Resolution Fund | (25,797) | (20,836)
Contributions to the Deposit Guarantee Fund | (492) | (93)
Losses on financial leasing operations | (37) | (84)
Other operating costs | (15,640) | (16,317)
| (118,539) | (106,291)
| (62,869) | (49,519)

The contribution to the banking sector is estimated according to the terms of the Decree-Law no. 55-A/2010. The
determination of the amount payable is based on: (i) the annual average liabilities deducted by core capital (Tier 1)
and supplementary capital (Tier 2) and deposits covered by the Deposit Guarantee Fund, and (ii) notional amount of
derivatives.

| 2022 REPORT & ACCOUNTS

498 |
The balance Contribution to the Resolution Fund corresponds to the periodic contributions that must be paid to the
Fund, as stipulated in Decree-Law No 24/2013. The periodic contributions are determined by a base rate, established
by the Bank of Portugal through regulatory instruments, to be applied in each year and which may be adjusted to the
credit institution’s risk profile on the basis of the objective incidence of those contributions. The period contributions
affect the liabilities of the credit institutions members of the Fund, as per the article 10 of the referred Decree-Law,
deducted from the liability elements that are part of the core capital and supplementary and from the deposits covered
by the Deposit Guarantee Fund.
The balance Contribution to the Single Resolution Fund (‘SRF’) corresponds to the Bank’s annual ex-ante contribution to
support the application of resolution measures at EU level. The SRF has been established by Regulation (EU) No
806/2014 (the “SRM Regulation”). The SRF is financed from ex-ante contributions paid annually at individual level by all
credit institutions within the Banking Union. Contributions to the SRF take into account the annual target level as well
as the size and the risk profile of institutions.
In calculating the ex-ante contributions, the SRF applies the methodology as set out in the Commission Delegated
Regulation (EU) 2015/63 and European Parliament and of the Council Regulation (EU) 806/2014. The annual
contribution to the Fund is based on the institution's liabilities excluding own funds and covered deposits considering
adjustments due to derivatives and intra group liabilities and on a risk factor adjustment that depends on the risk
profile of the institution.
In accordance with Article 67 (4) of SRM Regulation and in accordance with the Intergovernmental Agreement on the
transfer and mutualisation of contributions to the SRF, the ex-ante contributions are collected by national resolution
authorities and transferred to the SRF by 30 June of each year.
The Bank delivered the amount of Euros 25,797,000 (2021: Euros 20,836,000) to the Single Resolution Fund. The total
value of the contribution attributable to the Bank amounted to Euros 30,350,000 (2021: Euros 24,513,000) and the Bank
opted to constitute an irrevocable commitment, through a constitution of a bailment for this purpose, in the amount of
Euros 4,552,000 (2021: Euros 3,677,000), not having this component been recognised as a cost, as defined by the Single
Resolution Council in accordance with the methodology set out in Delegated Regulation (EU) No 2015/63 of the
Commission of 21 October 2014 and with the conditions laid down in the Implementing Regulation (EU) 2015/81 of the
Council of 19 December 2014. The total amount of irrevocable commitments constituted was Euros 25,506,000 (2021:
Euros 20,953,000), are recorded in the balance Other assets - Deposit account applications (note 28).
7.Staff costs
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Remunerations | 259,917 | 266,748
Mandatory social security charges |  |
Post-employment benefits (note 45) |  |
Service cost | (11,441) | (14,156)
Net interest cost / (income) in the liability coverage balance | (5,782) | 4,404
Cost with early retirement programs | 2,223 | 36,632
Amount transferred to the Fund resulting from acquired rights |  |
unassigned related to the Complementary Plan | (7) | (586)
| (15,007) | 26,294
Other mandatory social security charges | 69,510 | 39,839
| 54,503 | 66,133
Voluntary social security charges | 8,371 | 7,114
Other staff costs | 4,114 | 85,437
| 326,905 | 425,432

In 2022, the balance Remuneration includes the amount of Euros 5,478,000 related to the distribution of profits to
Bank's employees. In 2021, there was no distribution of profits to Bank's employees.

2022 REPORT & ACCOUNTS |

| 499
In November 2022, the Bank decided to award an extraordinary payment of Euros 500 to all employees without an
assigned vehicle, which amounted to Euros 2,758,000 reflected in the balance Remunerations. This measure aimed to
contribute to the mitigation of the impact of the current inflationary conjuncture on employees' income.
In 2022, the Bank accounted for in Other costs the amount of Euros 4,414,000 (2021: Euros 84,152,000), referring to
agreements already concluded with some employees whose effective departures will occur during the first half of 2023
(note 35). This balance also included severance payments in the amount of 1,254,000 (2021: Euros 4,091,000), of which
the highest amounted to Euros 200,000 (2021: Euros 886,000).
The average number of employees by professional category, at service in the Bank, is analysed as follows by category:

| 2022 | 2021
Top Management | 824 | 853
Intermediary Management | 1,384 | 1,474
Specific/Technical functions | 2,756 | 2,878
Other functions | 1,063 | 1,344
| 6,027 | 6,549

Remunerations
In compliance with the provisions of Article 47 of Banco de Portugal Notice no. 3/2020, quantitative information is
disclosed regarding the remuneration paid to different categories of members of governing bodies and categories of
employees provided for in Article 115 C no. 2 of the RGICS, as well as the information provided for in Article 450 g) to i)
of Regulation (EU) 2019/876 of the European Parliament and of the Council.
A. BCP Board of Directors
The fixed remuneration and social charges paid to members of the Board of Directors and key management members
are analysed as follows:

|  |  | (Thousands of euros)
| Board of Directors
| Executive Committee | Non-executive directors
| 2022 | 2021 | 2022 | 2021
Fixed remuneration | 2,954 | 2,947 | 1,831 | 1,882
Variable remuneration |  |  |  |
Pecuniary | 370 | 246 | — | —
Shares | 1,322 | 172 | — | —
Deferred | 1,024 | 138 | — | —
Supplementary retirement pension | 611 | 611 | 138 | 138
Post-employment benefits | (42) | (1) | — | —
Other mandatory social security charges | 734 | 733 | 443 | 457
| 6,973 | 4,846 | 2,412 | 2,477
Number of beneficiaries | 6 | 6 | 11 | 11

Considering that the remuneration of members of the Executive Committee and Directors, with an exclusivity contract,
intends to compensate the functions that are performed in the Bank and in all other functions performed in subsidiaries
or governing bodies for which they have been designated by indication or in representation of the Bank, in the latter
case, the net amount of the remuneration annually received will be deducted from the fixed annual remuneration
attributed by the Bank, ensuring that the amount actually paid corresponds to the amount approved by the
Remuneration and Welfare Board.
In 2022, it was assigned variable remuneration in accordance with the remuneration policies for the members of the
management and supervisory bodies and for employees, approved for 2021, as described in accounting policies 1 R4 and
1 R5.
In 2022, the variable remuneration attributed was Euros 616,000 in cash, of which Euros 246,000 are deferred for 5
years, and 12,416,223 shares corresponding to Euros 2,567,000, of which 1,568,846 shares are deferred for 5 years, and
3,397,643 shares are deferred for 3 years.

| 2022 REPORT & ACCOUNTS

500 |
In 2021, the deferred variable remuneration attributed to the Executive Committee for the year 2020, was Euros
164,000 in cash and 807,882 BCP shares.
In 2022, the deferred variable remuneration attributed to the Executive Committee is related to 2020, 2019 and 2018
years, and amounts to Euros 590,000 in cash and 2.443.549 BCP shares in the amount of Euros 434,000.
In 2021, the 2019 deferred variable remuneration paid to the Executive Committee relates to the 2018 financial year. It
includes the amount of Euros 89,000 and 347,432 BCP shares in the amount of Euros 49,000.
During 2022 and 2021, no severance payments were paid to members of the Board of Directors.
B. Key Function Holders (KFH)
In 2022, the remunerations and social security charges supported with the Bank's Key Function Holders are, by segment,
as follows:

|  |  |  |  | (Thousands of euros)
| 2022
| Key Function Holder (KFH)
| Retail | Corporate | Private Banking | Control Functions | Others | Total
Fixed remuneration | 1,317 | 2,657 | 453 | 2,474 | 5,041 | 11,942
Variable remuneration |  |  |  |  |  |
Pecuniary | 129 | 176 | 43 | 224 | 448 | 1,020
Shares | 80 | 105 | 19 | 139 | 261 | 604
Deferred | 48 | 42 | 9 | 20 | 120 | 239
Post-employment benefits | (112) | (108) | (7) | (191) | (366) | (784)
Other mandatory social security charges | 331 | 547 | 111 | 649 | 1,209 | 2,847
| 1,793 | 3,419 | 628 | 3,315 | 6,713 | 15,868
Number of beneficiaries | 9 | 15 | 2 | 26 | 38 | 90

Arising from the application of the Remuneration Policies for Employees, approved for the financial year 2021, as
described in accounting policies 1 R4 and 1 R5, in 2022, the 90 Key Function Holders were awarded with variable
remuneration, in the amount of Euros 236,000 in cash and 1,534,941 shares deferred for 5 years, as well as 174
participation units from AF Fund deferred for 3 years.
In 2022, deferred variable remunerations were paid to KFH deferred from 2021, 2020 and 2019 years, corresponding in
cash to Euros 57,000 and shares in the amount of Euros 182,000.
In 2022, severance payments were paid to 3 Bank's Key Function Holders in the amount of Euros 255,000 of which the
highest amounts to Euros 200,000.
In 2021, the remunerations and social security charges supported with the Bank's Key Function Holders are, by segment,
as follows:

|  |  |  |  | (Thousands of euros)
| 2021
| Key Function Holder (KFH)
| Retail | Corporate | Private Banking | Control Functions | Others | Total
Fixed remuneration | 1,188 | 2,873 | 450 | 2,100 | 4,513 | 11,124
Variable remuneration |  |  |  |  |  |
Pecuniary | 28 | 46 | 6 | 57 | 119 | 256
Shares | 20 | 27 | 4 | 29 | 73 | 153
Deferred | 31 | 34 | 6 | 15 | 93 | 179
Post-employment benefits | (76) | (20) | 13 | (78) | (214) | (375)
Other mandatory social security charges | 292 | 741 | 109 | 530 | 1,116 | 2,788
| 1,483 | 3,701 | 588 | 2,653 | 5,700 | 14,125
Number of beneficiaries | 8 | 16 | 2 | 22 | 37 | 85

2022 REPORT & ACCOUNTS |

| 501
As described in accounting policies 1.R4 and 1.R5, during 2021, the 85 Bank's Key Function Holders were awarded
variable remuneration arising from the application of the Remuneration Policies for Employees, approved for the
financial year 2020, which will be deferred over a period of 5 years, in the amount of Euros 229,000.
In 2021, deferred variable remuneration was paid to Bank's Key Function Holders deferred from 2020 and 2019,
corresponding in cash to the amount of Euros 42,000 and shares in the amount of Euros 137,000.
In 2021, severance payments were paid to 3 Bank's Key Function Holders in the amount of Euros 1,327,000 of which the
highest amounts to Euros 886,000.
Remunerations paid and social charges supported with the Bank's KFH, broken down by key management elements and
staff members whose professional activities have a significant impact on the Bank's risk profile, are the following:

|  |  |  |  | (Thousands of euros)
| Key Function Holder (KFH)
| Key management members | Other KFH | Total
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021
Fixed remuneration | 7,865 | 7,431 | 4,077 | 3,693 | 11,942 | 11,124
Variable remuneration |  |  |  |  |  |
Pecuniary | 705 | 170 | 315 | 86 | 1,020 | 256
Shares | 417 | 111 | 187 | 42 | 604 | 153
Deferred | 230 | 169 | 9 | 10 | 239 | 179
Post-employment benefits | (453) | (202) | (331) | (173) | (784) | (375)
Other mandatory social security charges | 1,934 | 1,840 | 913 | 948 | 2,847 | 2,788
| 10,698 | 9,519 | 5,170 | 4,606 | 15,868 | 14,125
Number of beneficiaries | 53 | 51 | 37 | 34 | 90 | 85

During 2022, deferred variable remunerations from 2021 and 2020 years were paid in cash to Key management
members, in the amount of Euros 55,000, as well as BCP shares and participation units from AF Fund from the years
2021, 2020 and 2019 corresponding to Euros 175,000. Relatedly to the other KFH, were paid Euros 3,000 in cash
deferred from 2020 and shares and participation units from AF Fund, from the years 2020 and 2019, corresponding to
Euros 7,000.
During 2022, with reference to the financial year of 2021, the Key management members were awarded with deferred
variable remuneration in the amount of Euros 236,000 and 1.534.941 shares deferred for 5 years, as well as 174
participation units from AF Fund deferred for 3 years.
During 2021, deferred variable remuneration for the year 2020 was paid in cash to Key management members, in the
amount of Euros 39,000, as well as shares from the years 2020 and 2019 corresponding to Euros 130,000, and it was paid
to other KFH, deferred from 2020, the value of Euros 3,000 in cash and shares from the years 2020 and 2019
corresponding to Euros 7,000.
In 2021, with reference to the financial year of 2020, Key management members were awarded variable remuneration
deferred over 5 years in the amount of Euros 212,000, and to other KFH it was awarded the amount of Euros 17,000.
In 2022 and 2021, the Bank does not have Key function holders with remunerations exceeding Euros 1 million.

| 2022 REPORT & ACCOUNTS

502 |
8.Other administrative costs
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Outsourcing and independent labour | 74,034 | 75,953
Rents and leases | 8,241 | 7,547
Other specialised services | 18,873 | 18,797
Communications | 7,631 | 8,175
Information technology services | 18,228 | 16,422
Maintenance and related services | 8,621 | 7,725
Water, electricity and fuel | 10,438 | 6,391
Advertising | 6,486 | 6,534
Advisory services | 11,519 | 10,045
Transportation | 7,195 | 5,493
Legal expenses | 3,340 | 3,561
Travel, hotel and representation costs | 2,254 | 1,386
Insurance | 2,601 | 2,409
Consumables | 1,977 | 1,966
Credit cards and mortgage | 1,163 | 1,638
Training costs | 1,044 | 980
Other supplies and services | 6,074 | 5,236
| 189,719 | 180,258

The balance Rents and leases includes, the amount of Euros 30,000 (2021: Euros 95,000) related to short-term lease
contracts and the amount of Euros 1,742,000 (2021: Euros 1,937,000) related to lease contracts of low value assets, as
described in the accounting policy 1.H.
The balance Other specialised services includes fees for services rendered by the Statutory Auditor of the Bank,
currently in functions, and by companies in its network as part of its statutory audit functions, as well as other services,
are as follows:

| (Thousands of euros)
| 2022 | 2021
Auditing services |  |
Legal certification | 2,243 | 2,183
Other assurance services | 1,085 | 1,059
Other services | 300 | 554
| 3,628 | 3,796

2022 REPORT & ACCOUNTS |

| 503
9.Amortisations and depreciations
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Intangible assets amortisations (note 26): |  |
Software | 25,717 | 25,501
Other tangible assets depreciations (note 25): |  |
Real estate | 7,517 | 7,931
Equipment |  |
Computers | 7,151 | 8,863
Security equipment | 655 | 684
Installations | 2,040 | 1,897
Machinery | 430 | 446
Furniture | 1,452 | 1,579
Motor vehicles | 1,451 | 1,421
Other equipment | 8 | 8
Right-of-use |  |
Real estate | 33,625 | 33,289
Vehicles and equipment | 4 | 20
| 54,334 | 56,138
| 80,051 | 81,639

10.Impairment of financial assets at amortised cost
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Loans and advances to credit institutions (note 18): |  |
Charge for the year | 221 | 859
Reversals for the year | (554) | (28)
| (333) | 831
Loans and advances to customers (note 19): |  |
Charge for the year | 229,531 | 298,210
Reversals for the year | (6,901) | (17,374)
Recoveries of loans and interest charged-off | (6,217) | (8,523)
| 216,413 | 272,313
Debt securities (note 20) |  |
Associated to credit operations |  |
Charge for the year | 8 | 244
Reversals for the year | (2,393) | (2,533)
| (2,385) | (2,289)
Not associated to credit operations |  |
Charge for the year | 1,473 | 2,039
Reversals for the year | (1,332) | —
| 141 | 2,039
| (2,244) | (250)
| 213,836 | 272,894

| 2022 REPORT & ACCOUNTS

504 |
11.Impairment of financial assets at fair value through other comprehensive
income
The detail of these balances is comprised of:

| (Thousands of euros)
| 2022 | 2021
Impairment of financial assets at fair value through other comprehensive income (note 21) |  |
Charge for the year | 61 | 4,549
Reversals for the year | (5,334) | (157)
| (5,273) | 4,392

12.Impairment of other assets
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Impairment of investments in associated companies (note 23) |  |
Charge for the year | 18,077 | 33,967
Reversals for the year | (67,374) | (21,673)
| (49,297) | 12,294
Impairment of non-current assets held for sale (note 24) |  |
Charge for the year | 51,931 | 34,997
| 51,931 | 34,997
Impairment of other assets (note 28) |  |
Charge for the year | 10,083 | 5,661
Reversals for the year | (175) | (38)
| 9,908 | 5,623
| 12,542 | 52,914

13.Other provisions
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Provision for guarantees and other commitments (note 35) |  |
Charge for the year | 2,042 | 11,562
Reversals for the year | (448) | —
| 1,594 | 11,562
Other provisions for liabilities and charges (note 35) |  |
Charge for the year | 102,328 | 112,312
Reversals for the year | (21) | (73)
| 102,307 | 112,239
| 103,901 | 123,801

2022 REPORT & ACCOUNTS |

| 505
14.Gains / (losses) arising from sales of subsidiaries and other assets
The amount of this account is comprised of:

| (Thousands of euros)
| 2022 | 2021
Gains / (losses) on Sale of subsidiaries | 1,712 | 566
Gains / (losses) on Sale of other assets | 11,114 | 6,958
| 12,826 | 7,524

The balance Gains /(Losses) on disposal of other assets includes essentially gains on disposal of assets held by the Group
and classified as non-current assets held for sale which corresponds to a gain of Euros 15.066.000 (2021: gain of Euros
8.306.000).
15.Earnings per share
The earnings per share are calculated as follows:

| (Thousands of euros)
| 2022 | 2021
Net income / (loss) for the year | 478,408 | 90,060
Interests of the perpetual subordinated bonds (Additional Tier 1) | (37,000) | (37,000)
Adjusted net income / (loss) | 441,408 | 53,060
Average number of shares | 15,113,989,952 | 15,113,989,952
Basic earnings per share (Euros) | 0.059 | 0.004
Diluted earnings per share (Euros) | 0.059 | 0.004

The Bank's share capital, as at 31 December 2022, amounts to Euros 3,000,000,000 (2021: Euros 4,725,000,000) and is
represented by 15,113,989,952 nominative book-entry shares without nominal value, fully subscribed and paid up. As
described in note 43, pursuant to the resolutions adopted at the General Meeting held on 20 December 2022, the Bank
registered its new share capital of 3,000,000,000 Euros, maintaining the number of nominatives, book-entry shares
without nominal value and of the voting rights.
There were not identified another dilution effects of the earnings per share as at 31 December 2022 e 2021.
16.Cash and deposits at Central banks
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Cash | 326,291 | 340,871
Central Banks | 2,630,201 | 6,428,190
| 2,956,492 | 6,769,061

The balance Central Banks includes deposits at Central Banks of the countries where the Bank operates to satisfy the
legal requirements to maintain a cash reserve calculated based on the value of deposits and other effective liabilities.
According to the European Central Bank System for Euro Zone, the cash reserve requirements establishes the
maintenance of a deposit with the Central Bank equivalent to 1% of the average value of deposits and other liabilities,
during each reserve requirement period. The rate is different for countries outside the Euro Zone.
In addition, from the reserve counting period started on 30 October 2019, the ECB introduced the tiering regime, in
which the balance with the Central Bank in excess of the minimum cash reserves, up to an estimated maximum of 6
times of the reserves, is remunerated at the central bank's lending rate instead of the deposit rate.

| 2022 REPORT & ACCOUNTS

506 |
17.Loans and advances to credit institutions repayable on demand
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Credit institutions in Portugal | 1,280 | 1,624
Credit institutions abroad | 36,254 | 138,236
Amounts due for collection | 93,866 | 57,107
| 131,400 | 196,967

The balance Amounts due for collection represents essentially cheques due for collection on other financial institutions.
These balances are settled in the first days of the following month.
18.Loans and advances to credit institutions
This balance is analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Loans and advances to credit institutions in Portugal |  |
Loans | 4,222 | 18,240
Term applications to collateralise CIRS and IRS operations (*) | 26,890 | —
Other | 1,067 | 15
| 32,179 | 18,255
Loans and advances to credit institutions abroad |  |
Term deposits | 288,238 | 116
Term deposits to collateralise CIRS and IRS operations (*) | 38,480 | 12,450
Other | 26,069 | 20,498
| 352,787 | 33,064
| 384,966 | 51,319
Impairment for loans and advances to credit institutions | (802) | (1,135)
| 384,164 | 50,184

(*) Under the scope of derivative financial instruments operations (IRS and CIRS) with institutional counterparties, and as defined in the respective
contracts ("Cash collateral"). These deposits are held by the counterparties and are given as collateral of the referred operations (IRS and CIRS), whose
revaluation is negative for the Bank.
This balance is analysed by the period to maturity, as follows:

| (Thousands of euros)
| 2022 | 2021
Up to 3 months | 176,546 | 34,060
3 to 6 months | 72,839 | 1,875
6 to 12 months | 130,000 | 6,073
1 to 5 years | 5,581 | 9,311
| 384,966 | 51,319

2022 REPORT & ACCOUNTS |

| 507
The changes occurred in impairment for other loans and advances to credit institutions are analysed as follows:

| (Thousands of euros)
| 2022 | 2021
Balance on 1 January | 1,135 | 304
Impairment charge for the year (note 10) | 221 | 859
Reversals for the year (note 10) | (554) | (28)
Balance at the end of the year | 802 | 1,135

19.Loans and advances to customers
The analysis of loans and advances to customers, by type of credit, is as follows:

| (Thousands of euros)
| 2022 | 2021
Discounted bills | 188,801 | 138,818
Current account credits | 790,383 | 791,191
Overdrafts | 228,760 | 246,948
Loans | 12,401,631 | 13,057,295
Mortgage loans | 19,614,754 | 18,880,075
Factoring operations | 2,387,785 | 2,043,517
Finance leases | 2,451,407 | 2,434,354
| 38,063,521 | 37,592,198
Overdue loans - less than 90 days | 20,720 | 19,028
Overdue loans - Over 90 days | 176,113 | 580,275
| 38,260,354 | 38,191,501
Loans impairment | (925,525) | (1,274,364)
| 37,334,829 | 36,917,137

The balance Loans and advances to customers, as at 31 December 2022, is analysed as follows:

|  |  |  | (Thousands of euros)
| 2022
| Outstanding loans | Overdue loans | Gross amount | Impairment | Net amount
Public sector | 569,854 | — | 569,854 | (810) | 569,044
Asset-backed loans | 22,094,392 | 63,098 | 22,157,490 | (378,664) | 21,778,826
Other guaranteed loans | 5,307,938 | 52,050 | 5,359,988 | (172,959) | 5,187,029
Unsecured loans | 2,815,039 | 51,203 | 2,866,242 | (165,187) | 2,701,055
Foreign loans | 2,437,106 | 2,451 | 2,439,557 | (34,025) | 2,405,532
Factoring operations | 2,387,785 | 13,162 | 2,400,947 | (42,484) | 2,358,463
Finance leases | 2,451,407 | 14,869 | 2,466,276 | (131,396) | 2,334,880
| 38,063,521 | 196,833 | 38,260,354 | (925,525) | 37,334,829

The balances Asset-backed loans and Other guaranteed loans follow the subsequent types of guarantees considered:
–Asset-backed loans: Financial collaterals, physical collaterals (movable or immovable) and amounts receivable
(income consignment);
–Other guaranteed loans: First-demand guarantees issued by banks or other entities and personal guarantees.

| 2022 REPORT & ACCOUNTS

508 |
The balance Loans and advances to customers, as at 31 December 2021, is analysed as follows:

|  |  |  | (Thousands of euros)
| 2021
| Outstanding loans | Overdue loans | Gross amount | Impairment | Net amount
Public sector | 616,039 | — | 616,039 | (1,510) | 614,529
Asset-backed loans | 21,655,721 | 419,110 | 22,074,831 | (674,184) | 21,400,647
Other guaranteed loans | 5,861,392 | 55,257 | 5,916,649 | (180,794) | 5,735,855
Unsecured loans | 2,791,018 | 96,605 | 2,887,623 | (222,040) | 2,665,583
Foreign loans | 2,190,157 | 4,606 | 2,194,763 | (29,052) | 2,165,711
Factoring operations | 2,043,517 | 5,769 | 2,049,286 | (34,324) | 2,014,962
Finance leases | 2,434,354 | 17,956 | 2,452,310 | (132,460) | 2,319,850
| 37,592,198 | 599,303 | 38,191,501 | (1,274,364) | 36,917,137

The balance Loans and advances to customers includes the amount of Euros 10,613,589,000 (31 December 2021: Euros
11,896,688,000) regarding mortgage loans assigned to the cover pool backing the Group’s covered bond programme
issuances.
The Bank, as part of the liquidity risk management, holds a pool of eligible assets that can serve as collateral in funding
operations with the European Central Bank , which include loans and advances to customers.
As referred in note 46, the Bank provides loans to qualifying shareholders holding individually or together with their
affiliates, 5% or more of the share capital identified in note 37.
The Bank granted credit to qualifying shareholders and entities controlled by them, in the amount of Euros 98,654,000
(31 December 2021: Euros 149,819,000), as referred in note 46 A). The amount of impairment recognised for these
contracts amounts to Euros 914,000 (31 December 2021: Euros 2,988,000).
The conclusion of business between the Company and holders of qualifying holdings or individuals or legal entities
related to them in accordance with the provisions of article 33.º, n.º 3 of Notice 3/2020 of Bank of Portugal, regardless
of the amount, is always subject of consideration and deliberation by the Board of Directors, after obtaining a prior
opinion from the Audit Committee, and by proposal of the Executive Committee, which in turn deliberates under
proposal from the Credit Committee, after obtaining an analysis and opinion from the Compliance Office, which
pronounces regarding the compliance of the proposed operations with internal regulations, legal and regulatory
provisions and other conditions that may apply to them, and the Risk Office, which evaluates and issues an opinion on
the risks inherent to the operation.
The analysis of the maturing component of financial lease contracts, by type of client, is presented as follows:

| (Thousands of euros)
| 2022 | 2021
Individuals |  |
Home | 43,190 | 48,037
Consumer | 25,384 | 29,137
Others | 75,666 | 83,744
| 144,240 | 160,918
Companies |  |
Equipment | 459,708 | 464,168
Real estate | 1,847,460 | 1,809,268
| 2,307,168 | 2,273,436
| 2,451,408 | 2,434,354

2022 REPORT & ACCOUNTS |

| 509
The analysis of loans and advances to customers, as at 31 December 2022, by sector of activity, is as follows:

|  |  |  |  | (Thousands of euros)
| 2022
| Outstanding loans | Overdue loans | Gross amount | Impairment | Net amount | % Gross amount
Agriculture and forestry | 435,208 | 5,605 | 440,813 | (12,324) | 428,489 | 1.15%
Fisheries | 16,543 | 3,226 | 19,769 | (2,448) | 17,321 | 0.05%
Mining | 54,273 | 1,247 | 55,520 | (4,720) | 50,800 | 0.15%
Food, beverage and tobacco | 632,730 | 7,735 | 640,465 | (15,189) | 625,276 | 1.67%
Textiles | 480,006 | 8,913 | 488,919 | (16,718) | 472,201 | 1.28%
Wood and cork | 162,257 | 3,404 | 165,661 | (3,892) | 161,769 | 0.43%
Paper, printing and publishing | 127,735 | 455 | 128,190 | (3,284) | 124,906 | 0.34%
Chemicals | 646,610 | 12,508 | 659,118 | (33,780) | 625,338 | 1.72%
Machinery, equipment |  |  |  |  |  |
and basic metallurgical | 1,039,284 | 15,897 | 1,055,181 | (46,882) | 1,008,299 | 2.76%
Electricity and gas | 204,345 | 396 | 204,741 | (935) | 203,806 | 0.54%
Water | 170,523 | 160 | 170,683 | (7,641) | 163,042 | 0.45%
Construction | 1,241,016 | 14,036 | 1,255,052 | (130,800) | 1,124,252 | 3.28%
Retail business | 1,206,601 | 11,894 | 1,218,495 | (27,512) | 1,190,983 | 3.18%
Wholesale business | 1,463,879 | 16,588 | 1,480,467 | (53,646) | 1,426,821 | 3.87%
Restaurants and hotels | 1,457,643 | 13,426 | 1,471,069 | (61,449) | 1,409,620 | 3.84%
Transports | 722,477 | 3,218 | 725,695 | (10,763) | 714,932 | 1.90%
Post offices | 15,554 | 101 | 15,655 | (211) | 15,444 | 0.04%
Telecommunications | 214,278 | 1,418 | 215,696 | (7,728) | 207,968 | 0.56%
Services |  |  |  |  |  |
Financial intermediation | 1,995,786 | 1,536 | 1,997,322 | (43,973) | 1,953,349 | 5.22%
Real estate activities | 1,788,113 | 10,556 | 1,798,669 | (33,270) | 1,765,399 | 4.70%
Consulting, scientific |  |  |  |  |  |
and technical activities | 886,687 | 6,492 | 893,179 | (83,357) | 809,822 | 2.33%
Administrative and support |  |  |  |  |  |
services activities | 405,475 | 2,405 | 407,880 | (54,090) | 353,790 | 1.07%
Public sector | 575,166 | — | 575,166 | (810) | 574,356 | 1.50%
Education | 123,773 | 614 | 124,387 | (14,202) | 110,185 | 0.33%
Health and collective service activities | 349,399 | 792 | 350,191 | (6,403) | 343,788 | 0.92%
Artistic, sports |  |  |  |  |  |
and recreational activities | 227,772 | 1,727 | 229,499 | (35,283) | 194,216 | 0.60%
Other services | 107,747 | 852 | 108,599 | (97,599) | 11,000 | 0.28%
Consumer loans | 1,958,181 | 36,235 | 1,994,416 | (65,214) | 1,929,202 | 5.21%
Mortgage credit | 18,810,972 | 15,002 | 18,825,974 | (42,188) | 18,783,786 | 49.21%
Other domestic activities | 1,231 | 200 | 1,431 | (37) | 1,394 | 0.00%
Other international activities | 542,257 | 195 | 542,452 | (9,177) | 533,275 | 1.42%
| 38,063,521 | 196,833 | 38,260,354 | (925,525) | 37,334,829 | 100.00%

| 2022 REPORT & ACCOUNTS

510 |
The analysis of loans and advances to customers, as at 31 December 2021, by sector of activity, is as follows:

|  |  |  |  | (Thousands of euros)
| 2021
| Outstanding loans | Overdue loans | Gross amount | Impairment | Net amount | % Gross amount
Agriculture and forestry | 416,753 | 3,442 | 420,195 | (9,215) | 410,980 | 1.10%
Fisheries | 28,134 | 1,148 | 29,282 | (2,645) | 26,637 | 0.08%
Mining | 61,697 | 1,525 | 63,222 | (1,732) | 61,490 | 0.17%
Food, beverage and tobacco | 597,855 | 2,568 | 600,423 | (12,532) | 587,891 | 1.57%
Textiles | 506,416 | 9,000 | 515,416 | (17,097) | 498,319 | 1.35%
Wood and cork | 164,866 | 2,582 | 167,448 | (5,196) | 162,252 | 0.44%
Paper, printing and publishing | 170,270 | 505 | 170,775 | (3,471) | 167,304 | 0.45%
Chemicals | 630,128 | 6,869 | 636,997 | (24,311) | 612,686 | 1.67%
Machinery, equipment |  |  |  |  |  |
and basic metallurgical | 1,071,857 | 14,510 | 1,086,367 | (42,496) | 1,043,871 | 2.84%
Electricity and gas | 205,481 | 375 | 205,856 | (1,613) | 204,243 | 0.54%
Water | 187,502 | 150 | 187,652 | (18,981) | 168,671 | 0.49%
Construction | 1,459,976 | 23,584 | 1,483,560 | (108,535) | 1,375,025 | 3.88%
Retail business | 1,285,425 | 18,478 | 1,303,903 | (40,414) | 1,263,489 | 3.41%
Wholesale business | 1,517,385 | 21,377 | 1,538,762 | (66,599) | 1,472,163 | 4.03%
Restaurants and hotels | 1,623,835 | 14,409 | 1,638,244 | (119,532) | 1,518,712 | 4.29%
Transports | 737,281 | 6,828 | 744,109 | (25,913) | 718,196 | 1.95%
Post offices | 14,458 | 102 | 14,560 | (231) | 14,329 | 0.04%
Telecommunications | 230,618 | 1,685 | 232,303 | (9,268) | 223,035 | 0.61%
Services |  |  |  |  |  |
Financial intermediation | 1,782,846 | 64,641 | 1,847,487 | (117,507) | 1,729,980 | 4.84%
Real estate activities | 1,624,562 | 11,235 | 1,635,797 | (48,100) | 1,587,697 | 4.28%
Consulting, scientific |  |  |  |  |  |
and technical activities | 810,893 | 3,345 | 814,238 | (57,339) | 756,899 | 2.13%
Administrative and support |  |  |  |  |  |
services activities | 444,060 | 2,466 | 446,526 | (58,540) | 387,986 | 1.17%
Public sector | 666,680 | — | 666,680 | (1,510) | 665,170 | 1.75%
Education | 131,480 | 796 | 132,276 | (12,831) | 119,445 | 0.35%
Health and collective service activities | 372,898 | 891 | 373,789 | (15,059) | 358,730 | 0.98%
Artistic, sports |  |  |  |  |  |
and recreational activities | 338,897 | 42,494 | 381,391 | (108,083) | 273,308 | 1.00%
Other services | 126,971 | 241,073 | 368,044 | (203,702) | 164,342 | 0.96%
Consumer loans | 1,898,712 | 72,554 | 1,971,266 | (91,471) | 1,879,795 | 5.16%
Mortgage credit | 18,149,126 | 30,078 | 18,179,204 | (46,700) | 18,132,504 | 47.59%
Other domestic activities | 915 | 312 | 1,227 | (93) | 1,134 | 0.00%
Other international activities | 334,221 | 281 | 334,502 | (3,648) | 330,854 | 0.88%
| 37,592,198 | 599,303 | 38,191,501 | (1,274,364) | 36,917,137 | 100.00%

2022 REPORT & ACCOUNTS |

| 511
The analysis of loans and advances to customers, by maturity and by sector of activity as at 31 December 2022 is as
follows:

|  |  |  |  |  | (Thousands of euros)
| 2022
| Outstanding loans |  |  |
| Due within 1 year | 1 year to 5 years | Over 5 years | Total Outstanding | Overdue loans | Total | %
Agriculture and forestry | 92,676 | 167,590 | 174,942 | 435,208 | 5,605 | 440,813 | 1.15%
Fisheries | 3,246 | 8,950 | 4,347 | 16,543 | 3,226 | 19,769 | 0.05%
Mining | 10,747 | 31,782 | 11,744 | 54,273 | 1,247 | 55,520 | 0.15%
Food, beverage |  |  |  |  |  |  |
and tobacco | 310,259 | 229,443 | 93,028 | 632,730 | 7,735 | 640,465 | 1.67%
Textiles | 145,424 | 257,024 | 77,558 | 480,006 | 8,913 | 488,919 | 1.28%
Wood and cork | 49,465 | 82,635 | 30,157 | 162,257 | 3,404 | 165,661 | 0.43%
Paper, printing |  |  |  |  |  |  |
and publishing | 31,643 | 66,711 | 29,381 | 127,735 | 455 | 128,190 | 0.34%
Chemicals | 234,562 | 286,623 | 125,425 | 646,610 | 12,508 | 659,118 | 1.72%
Machinery, equipment |  |  |  |  |  |  |
and basic metallurgical | 290,909 | 539,606 | 208,769 | 1,039,284 | 15,897 | 1,055,181 | 2.76%
Electricity and gas | 36,902 | 60,164 | 107,279 | 204,345 | 396 | 204,741 | 0.54%
Water | 16,814 | 66,734 | 86,975 | 170,523 | 160 | 170,683 | 0.45%
Construction | 393,858 | 518,527 | 328,631 | 1,241,016 | 14,036 | 1,255,052 | 3.28%
Retail business | 359,820 | 547,579 | 299,202 | 1,206,601 | 11,894 | 1,218,495 | 3.18%
Wholesale business | 622,056 | 582,942 | 258,881 | 1,463,879 | 16,588 | 1,480,467 | 3.87%
Restaurants and hotels | 56,970 | 502,954 | 897,719 | 1,457,643 | 13,426 | 1,471,069 | 3.84%
Transports | 129,637 | 486,858 | 105,982 | 722,477 | 3,218 | 725,695 | 1.90%
Post offices | 10,886 | 3,840 | 828 | 15,554 | 101 | 15,655 | 0.04%
Telecommunications | 61,411 | 116,560 | 36,307 | 214,278 | 1,418 | 215,696 | 0.56%
Services |  |  |  |  |  |  |
Financial intermediation |  |  |  |  |  |  |
intermediation | 163,353 | 763,145 | 1,069,288 | 1,995,786 | 1,536 | 1,997,322 | 5.22%
Real estate activities | 271,098 | 727,418 | 789,597 | 1,788,113 | 10,556 | 1,798,669 | 4.70%
Consulting, scientific and |  |  |  |  |  |  |
technical activities | 184,913 | 335,019 | 366,755 | 886,687 | 6,492 | 893,179 | 2.33%
Administrative and support |  |  |  |  |  |  |
services activities | 70,664 | 204,228 | 130,583 | 405,475 | 2,405 | 407,880 | 1.07%
Public sector | 83,363 | 279,833 | 211,970 | 575,166 | — | 575,166 | 1.50%
Education | 21,846 | 35,943 | 65,984 | 123,773 | 614 | 124,387 | 0.33%
Health and collective |  |  |  |  |  |  |
service activities | 61,683 | 148,141 | 139,575 | 349,399 | 792 | 350,191 | 0.92%
Artistic, sports and |  |  |  |  |  |  |
recreational activities | 6,733 | 61,061 | 159,978 | 227,772 | 1,727 | 229,499 | 0.60%
Other services | 22,704 | 46,840 | 38,203 | 107,747 | 852 | 108,599 | 0.28%
Consumer credit | 607,515 | 649,136 | 701,530 | 1,958,181 | 36,235 | 1,994,416 | 5.21%
Mortgage credit | 12,341 | 207,492 | 18,591,139 | 18,810,972 | 15,002 | 18,825,974 | 49.21%
Other domestic |  |  |  |  |  |  |
activities | 219 | 394 | 618 | 1,231 | 200 | 1,431 | 0.00%
Other international |  |  |  |  |  |  |
activities | 344,088 | 39,544 | 158,625 | 542,257 | 195 | 542,452 | 1.42%
| 4,707,805 | 8,054,716 | 25,301,000 | 38,063,521 | 196,833 | 38,260,354 | 100.00%

| 2022 REPORT & ACCOUNTS

512 |
The analysis of loans and advances to customers, by maturity and by sector of activity, as at 31 December 2021 is as
follows:

|  |  |  |  |  | (Thousands of euros)
| 2021
| Outstanding loans |  |  |
| Due within 1 year | 1 year to 5 years | Over 5 years | Total Outstanding | Overdue loans | Total | %
Agriculture and forestry | 88,986 | 150,086 | 177,681 | 416,753 | 3,442 | 420,195 | 1.10%
Fisheries | 5,286 | 9,907 | 12,941 | 28,134 | 1,148 | 29,282 | 0.08%
Mining | 10,529 | 38,782 | 12,386 | 61,697 | 1,525 | 63,222 | 0.17%
Food, beverage |  |  |  |  |  |  |
and tobacco | 249,454 | 241,318 | 107,083 | 597,855 | 2,568 | 600,423 | 1.57%
Textiles | 127,136 | 267,472 | 111,808 | 506,416 | 9,000 | 515,416 | 1.35%
Wood and cork | 40,766 | 83,100 | 41,000 | 164,866 | 2,582 | 167,448 | 0.44%
Paper, printing |  |  |  |  |  |  |
and publishing | 66,861 | 64,169 | 39,240 | 170,270 | 505 | 170,775 | 0.45%
Chemicals | 175,281 | 298,448 | 156,399 | 630,128 | 6,869 | 636,997 | 1.67%
Machinery, equipment |  |  |  |  |  |  |
and basic metallurgical | 257,245 | 551,097 | 263,515 | 1,071,857 | 14,510 | 1,086,367 | 2.84%
Electricity and gas | 29,928 | 53,231 | 122,322 | 205,481 | 375 | 205,856 | 0.54%
Water | 13,604 | 42,479 | 131,419 | 187,502 | 150 | 187,652 | 0.49%
Construction | 394,624 | 608,642 | 456,710 | 1,459,976 | 23,584 | 1,483,560 | 3.88%
Retail business | 348,636 | 597,300 | 339,489 | 1,285,425 | 18,478 | 1,303,903 | 3.41%
Wholesale business | 566,754 | 650,604 | 300,027 | 1,517,385 | 21,377 | 1,538,762 | 4.03%
Restaurants and hotels | 63,446 | 494,620 | 1,065,769 | 1,623,835 | 14,409 | 1,638,244 | 4.29%
Transports | 91,255 | 353,749 | 292,277 | 737,281 | 6,828 | 744,109 | 1.95%
Post offices | 9,715 | 3,990 | 753 | 14,458 | 102 | 14,560 | 0.04%
Telecommunications | 71,631 | 114,413 | 44,574 | 230,618 | 1,685 | 232,303 | 0.61%
Services |  |  |  |  |  |  |
Financial intermediation |  |  |  |  |  |  |
intermediation | 131,847 | 387,924 | 1,263,075 | 1,782,846 | 64,641 | 1,847,487 | 4.84%
Real estate activities | 235,887 | 678,593 | 710,082 | 1,624,562 | 11,235 | 1,635,797 | 4.28%
Consulting, scientific and |  |  |  |  |  |  |
technical activities | 143,607 | 278,427 | 388,859 | 810,893 | 3,345 | 814,238 | 2.13%
Administrative and support |  |  |  |  |  |  |
services activities | 75,053 | 204,616 | 164,391 | 444,060 | 2,466 | 446,526 | 1.17%
Public sector | 75,438 | 343,970 | 247,272 | 666,680 | — | 666,680 | 1.75%
Education | 25,745 | 34,870 |